What to do after Buying Houston Life Insurance

Congratulations if you bought Houston life insurance. However, your job isn’t done yet. There are important steps to take after a policy is purchased.

The first step is putting your agent’s business card on the refrigerator so you always know where it is and it has no chance of getting lost. If you ever need to update your payment information or make another policy change, you’ll have a tough time doing it if your agent’s business card is shoved deep in a drawer and the policy is buried in a stack of papers.

The second step involves letting your beneficiaries know about their new status as beneficiaries. Keeping them in the loop will avoid confusion later. I don’t recommend having this conversation with contingent beneficiaries though. A contingent beneficiary is only entitled to the death benefit if the insured outlives all the primary beneficiaries. Contingent beneficiaries play an important role in making sure a living beneficiary is available for benefit payments. However, they may resent being told they are second in line.

The third step is deciding where to store your Houston life insurance policy. Many people give the policy contract to their beneficiary since the beneficiary will need immediate access to it when it comes time to filing a claim. If you want to keep the policy in your home and with the beneficiary, the insurance company will charge a small fee, usually around $25, for a duplicate copy. I also recommend placing it in a fire safe.

How Many Beneficiaries Should I Have?

Having a backup beneficiary, also called a contingent beneficiary, is a good idea. Many policy owners forget to update their policy when a beneficiary passes away. If there are no living beneficiaries, the insurance proceeds are left to the estate. Many of the financial advantages of life insurance evaporate whenever the estate is the beneficiary of a policy. Bottom line: always list a contingent beneficiary.

You can also split the insurance proceeds among several primary beneficiaries. This isn’t common on small policies, but it may serve a purpose on larger policies. Simply list out all the primary beneficiaries and what percentage they receive. Go to our contact us page if you have questions.