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Why Your Family Should Know About Your Life Insurance Policy?

  • 5th Nov 2020
  • 201
Why Your Family Should Know About Your Life Insurance Policy?

Life is highly vulnerable. Moreover, in the current pandemic situation, uncertainty has startled the world. In such times, a secure insurance cover is an unparalleled need. For a bread earner, the security of the family in his or her absence is the prime responsibility and also the main cause of worry. Hence, for such times, a life insurance policy proves its metal.

But what if an unfortunate event happens, leaving your family to struggle financially because they do not know about your life insurance policy? Thus, buying the policy is not the end of it. The insured should also inform the family about the policy.

Reasons why the family should know about your life insurance policy:

1. Prior knowledge will enable the family to make a timely claim: The basic purpose of a life insurance policy is to be able to safeguard the family’s financial wellbeing in case of the demise of the insured. However, to provide financial support to the loved ones, you must make them aware of the plan, and the details such as insurance provider, term, the sum assured, etc. This will help the family make a timely claim after your demise. Without this knowledge, the beneficiary might not be able to submit a claim and get the benefits. A person cannot claim the benefit of a policy, which he/she never knew existed.

2. The insurance money could be used to meet immediate and major family expenses: A major use of life insurance policies is supporting the family to meet big expenses such as paying off debts, setting up a business, paying the mortgage, etc. However, this is not possible if the family is unaware of the policy and how to claim the benefits. Moreover, in some cases, the family might even require funds to pay for funeral expenses. Hence, knowledge about the insurance policy, its provider, broker, claim process, time, etc. should be explained well to the beneficiary or a close and reliable relative.

3. The sum received can be effectively used to fulfil your wishes rather than the beneficiary’s: Having an insurance policy can support the family in your absence. The usage of funds depends on the discretion of the beneficiary. In many cases, the funds might not be utilized to the best capability or in the right source or as per your desires. Moreover, the usage might be biased as per the beneficiary’s wishes. Hence, it is important to inform the family about the policy and also explain your desires regarding the estate, distribution of funds or usage of money, if any.

4. The family could use insurance sum to pay off any existing liabilities: Death is a sudden event and one that no one expects.In case of the untimely demise of the insured, the family is left with the obligation to the pay off the existing liabilities. This can cause unnecessary burden on the family in extreme times. Also, if the beneficiary is not informed about the insurance policy, this can increase the crunch in those situations. Hence, to be sure the family is secured and can pay off current liabilities easily, you should inform the nominee about the policy and the claim process.

5. Advance security offered by insurers could be used to pay for funeral expenses in a traumatic time: The aftermath of the death of the insured can be incredibly stressful and traumatic for the family. In those times, the additional duties of funeral and last rites can be even more emotionally demanding. This situation can be eased with an effective insurance policy. Many insurance providers offer advance security to help with funeral costs and other expenses. But to claim this security, the family should know about the policy and the benefits it offers, so that the claim can be made in time.

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