Advanced Underwriting Consultants

Question of the Day – July 29

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers.  Here’s the question of the day.

Question: What are some of the most common mistakes clients make with regard to life insurance?

Answer: Here are a few:

  • THE INSURED’S ESTATE HAS BEEN NAMED BENEFICIARY. If the policy has a named beneficiary, the death benefit can be paid without the hassle of probate.

  • THE POLICY HAS NO NAMED CONTINGENT BENEFICIARIES. If the primary beneficiary pre-deceases the insured, the next default beneficiary is usually the estate—and that means probate is necessary.

  • MINORS OR OTHER IMPAIRED PERSONS HAVE BEEN NAMED BENEFICIARIES. If young children are in line for life insurance money, it usually means a court has to supervise the process and administration of the funds.  That can be avoided with proper planning.

  • THE BENEFICIARY LANGUAGE IS WRONG OR UNCLEAR. Estate planning attorneys run into circumstances all the time where the beneficiary designation doesn’t match the insured’s intentions.

  • FAMILY NEEDS ARE NOT ADEQUATELY ADDRESSED. It used to be that a million dollar insurance policy felt like it was enough to take care of family needs in the event of the breadwinner’s death.  For many, that’s not nearly enough anymore.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.