Insurance policies after death: Plan ahead for the benefit of your loved ones

There are many details to have to think about when a person passes away, and it’s all at a very difficult time. That’s why it makes sense to plan ahead and speak openly with your loved ones about your assets, finances, and, yes, your insurance policies. They may play a part in the proper succession of your estate. Ensure your executor and those responsible for your estate are aware of all of your policies and have the proper contact information for each of your representatives. This will help ease the hardest of times and expedite the succession process, all for the benefit of those you love.

Life insurance is also an investment

Life insurance is the only type of insurance product designed specifically for death, which makes it a topic not many want to talk about. If you have assets, you should have life insurance. When you die, life insurance will help pay for immediate expenses such as funeral costs and outstanding debt, and you can also design your policy so that the remaining balance goes to someone or something you care about.

The two main types of life insurance in Canada are permanent and term. Permanent life insurance policies are purchased for an indefinite period of time and come with a cash value, providing your beneficiaries with a tax-free payment when you pass away. Quite often, people are covered through their place of work and monthly payments come directly out of their paycheques. If this is not the case for you, insurance brokerages such as us at Lane’s are able to offer a range of whole and universal life insurance policies and those that do not require medical exams.

Term life insurance is less common. Coverage provides a death benefit if the insured dies within a specific “term” (usually 10 or 20 years), and/or before a certain age (such as 65 years old). If the person covered doesn’t die within the term or by the determined age, benefits are not paid out. There is no cash value to a term insurance policy, making it more of an option for additional coverage, not as sole coverage. Term life insurance usually can be converted to permanent life insurance at any time.

The amount your beneficiaries will receive upon your death depends on the type of policy you have and the amount you have put into it. As soon as you die, your life insurance company should be contacted in order to start the claim. Your beneficiaries will need to provide your death certificate, and it can take up to 60 days to receive the final benefit. Generally speaking, your beneficiaries may receive their payments in a lump sum, in installments, or in annuities or shared assets accounts.

A spouse, partner, friend, family member, and charitable organization may be named as a beneficiary, and death benefits may be proportioned out in any way you like. Beneficiaries can be revocable, which means you can change them at any time, and irrevocable, which means you must have their written permission before making any changes.

What about other insurance policies?

If you would like to pass on your vehicle to someone specific, make sure this is directed in your will. Your executor can then have your insurance policy cancelled immediately to transfer ownership or have the vehicle and its insurance transferred into the succession, in which case it will eventually go to the person who you wanted it to. A death certificate and proof of heirship are usually necessary in this case.

Home insurance works much the same. Depending on the directives of your will, when you pass away your insurance can either be cancelled or placed in the name of the succession. Your insurance provider will, of course, require supporting documents. If there is still a mortgage on your property, the insurer will often let the lender know. Those responsible for your estate must ensure your property remains in good condition while the terms of the will are being settled. If your property is going to be vacant, executors should ask your insurer to issue a vacancy permit. If your property goes into succession, insurance premiums must be paid until the process is completed.

Count on Lane’s for the best products in the Alberta insurance industry

A number of resources to assist with planning for dying are available on the Government of Alberta website, including Alberta’s complete Wills and Succession Act, which outlines how estates are settled in the province.

For life insurance and other products, Lane’s Insurance is a leading Alberta-based brokerage providing a comprehensive range of competitively priced insurance products offered through the province’s top carriers. You can also count on Lane’s for: