TOP SIX LIFE INSURANCE MISTAKES

Top 6 Life Insurance Mistakes

Legal expert Danielle Mayoras spoke with CBS News Detroit and shared her list of the most common mistakes people make with life insurance.

1.  Not having life insurance!

People insure their homes and their cars, but many people forget to buy life insurance to provide for their loved ones if something happens to them.  If something happened to you tomorrow, would your loved ones be financially protected?  If the answer is “no,” then you need life insurance!

2.  Not having enough life insurance or relying on an employer policy. 

Oftentimes, individuals have a modest life insurance policies or a policies through work, but it is not nearly enough to take care of their loved ones if something happens to them.  And if your employment changes, you may not have coverage.

3.  Forgetting to name beneficiaries on your life insurance policy. 

If you don’t name beneficiaries on your life insurance policy it may not pass onto the people that you want.  To make matters worse, most life insurance companies name your “estate” as the beneficiary if you don’t designate someone.  This means that your life insurance goes through the probate court, which is time consuming, public, and expensive.  If you have a will, then the proceeds go to your beneficiaries under your will.  If you don’t have a will, then the proceeds go to your heirs at law according to the state that you live in, which may not be the people you want the money to go to!

4.  Failing to update your beneficiary designations. 

This is a big one.  In the event of a divorce, death, marriage, or any other life events, you want to make sure that you updated beneficiary designations are reflected.  Definitely don’t wait to do this.  You never know when something unexpected will happen so don’t procrastinate.

5.  Not remembering to name your trust as a beneficiary. 

If you have a revocable living trust, in most cases, you will want to designate the trust as the beneficiary of your life insurance so all of  the “what ifs” you addressed in your trust carry over to your life insurance beneficiary designation.  This is especially important if you don’t want a beneficiary (like a child or grandchild) receiving the money in a lump sum payment.  If you are doing estate tax planning, and have an irrevocable life insurance trust, this is critical.

6.  Naming a beneficiary under the age of 18 on your life insurance. 

If you name a child or someone under the age of 18 as your beneficiary, then in most cases, they won’t be able to receive the money.  Instead, it would have to go through the court system.  Normally, there would be a conservatorship established and the child would receive all of the money at age 18.  You are much better to give your minor child the money through a trust or custodial account.

Danielle and Andy Mayoras are co-authors of Trial & Heirs:  Famous Fortune Fights!, legal media experts, and keynote speakers.  You can find them on Facebook, Instagram, YouTube, and LinkedIn.  For all of the latest legal news, be sure to check out their blog.

     

    MEET DANIELLE

    Danielle Mayoras is an on-camera legal expert, attorney, author, and keynote speaker. As a respected media source, she has lent her expertise and analysis to hundreds of media sources, including The Associated Press, Los Angeles Times, ABC News, The Wall Street Journal, Vanity Fair, People, Forbes, Kiplinger, The Washington Post, Huffington Post, among many others. She has appeared on Access Hollywood, the Rachael Ray Show, The Insider, CNN, CNN International, NBC Nightly News, Forbes, The Hallmark Channel, ABC’s Live Well Network, FOX, PBS, and NBC affiliates. Danielle also serves as a legal analyst for CBS News Detroit.

    In addition to co-authoring the best-selling book Trial & Heirs: Famous Fortune Fights!, Danielle has been a contributor to Forbes and other outlets. Danielle has also appeared as a TV host and legal expert on multiple celebrity documentary series on the REELZ network. When not doing media, Danielle helps clients in her thriving law firm practice and serves as a keynote speaker delighting audiences across the country.