obsessive compulsive disorderObsessive-compulsive disorder, or OCD – it’s a term that most of us are familiar with, often because it is used in a humorous way (I.e. – That’s my OCD kicking in, or, I’m OCD about that).

But OCD isn’t a joke, and certainly not when you are applying for life insurance.

OCD is a recognized medical condition, and has implications for a person’s future, as well as the risk that a life insurance company will associate with writing a policy.

The risk is generally perceived to be higher for someone with OCD than it is for someone without it, and can sometimes rise to the level of a declined life insurance application.

Sometimes, but certainly not always.
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life insurance beneficiaryWhen choosing a life insurance beneficiary, it is very important to be clear in the designations of who is going to receive the benefits after the death of the insured.

Due to specifications regarding the wording of beneficiaries, certain members of the family may be left out, while other may be unintentionally included.

It becomes especially complicated when there is an ex-spouse involved, or adopted children.

Should the beneficiary die before the insured, then a contingent receives the benefits instead.

However, this can become complicated if the contingent is a minor and no guardian has been designated. The process of determining insurance beneficiaries can be complicated, especially given the changing family situations that happen with divorce and death.

When deciding on your insurance beneficiaries, make sure the beneficiaries are clearly distinguished, with varying levels of contingents.

Specifying Your Beneficiaries

When writing out who will receive life insurance benefits upon your death, simply putting one word designations like “spouse”, “children”, or “grandchildren” isn’t enough anymore. If you put “spouse,” then former spouses may be included in the event of a divorce. In the case that children are the beneficiaries, then which children will be included must be specified.

Are they only children from your marriage, or do children born out of wedlock count?

Also, it must be specified if adopted children are included, or the children of a spouse which you may have adopted as well. The same applies for grandchildren. Also, if the children are minors, it is generally recommended that a guardian be appointed, as benefits aren’t usually paid to minors.

The beneficiaries can be specific, or a class. Specific beneficiaries are identified by name and relationship to the insured, while a class is identified mainly by relationship, such as “children.” If a class is chosen as a beneficiary, who belongs to that class needs to be clearly identified, as legal complications can arise if the class isn’t distinguished.

Also, it is advisable to have several levels of contingencies. In the case that a beneficiary dies, the benefits will go to the contingent.

However, if the contingency dies as well as the beneficiary, the benefits may be left in limbo, or to be disputed by other family members. That is why several contingencies must be clearly identified, as many complications can arise considering the possibilities of a changing family structure.

How Much Life Insurance Will Your Beneficiaries Need?

Aside from ensuring that you’re choosing the right beneficiary, it’s vital that you purchase enough insurance for your family. Not having enough life insurance could be one of the worst mistakes that you could make for your family. If you don’t have enough life insurance protection, and something were to happen to you, your family would be responsible for additional debts and bills that they wouldn’t have the money to cover. When you’re determining how much life insurance you need to buy, there are several different categories that you’ll need to consider to ensure that they will have enough resources.

The first number that you should crunch is your debts and final expenses that your family would be left with if something tragic were to happen to you. The main goal of your life insurance plan is to give your family the money that they need to pay off all of your bills and debts. Losing a loved one is never going to be easy, but being responsible for a mountain of debt is going to make the situation that much worse. Your life insurance plan will give your family the money that they need to pay off those outstanding debts.

The next number that you should crunch is your annual income. The next purpose of your life insurance plan is to give your family the money that they need to replace your paycheck if you were to pass away. If you’re one of the main income earners in your home, then your family would struggle if something were to happen to you. Your life insurance policy will give your loved ones the money that they need to replace that paycheck.

Another category that you should account for is the funeral expenses and additional fees that your family would have to pay for after you pass away. While you may not realize it, funerals are expensive. In fact, the average funeral can cost around $10,000, which can be difficult for a grieving family to cover. Your life insurance coverage will give your family the money that they need to fulfill your family wishes without having to worry about money.

Getting Affordable Life Insurance

In addition to choosing the right beneficiary, and ensuring that they will have enough money, it’s also important to get the most affordable life insurance plan available. One of the most common reasons that the average American doesn’t buy life insurance is because they assume that it’s going to be too expensive to fit in their budget. In most cases, that couldn’t be further from the truth. A lot of applicants are surprised to see how cheap a life insurance plan can be, regardless of how much life insurance you need.

One of the easiest ways to get lower insurance rates is by cutting out tobacco. If you’re listed as a smoker on your life insurance application, then you should expect to get much higher premiums. Smokers are at a much greater risk to be diagnosed with health problems like cancer or heart problems, which means that smokers are a greater risk to the insurance company. They are going to offset that risk by charging you much more for your insurance coverage. In fact, smokers are going to pay at least twice as much for their plan versus what a non-smoker would pay for the same coverage.

The next way that you can save money is by improving your overall health. Before the insurance company approves your application, they are going to require that you take a medical exam. The results of the medical exam are going to play a major role in how much you pay every month for your protection. If you want to save money, you’ll need to get better results from the exam. The two best ways that you can do that are by getting regular exercise and sticking to a healthy diet. Both of these can help you lose weight, lower your blood pressure, and reduce your risk of being diagnosed with health complications. If you’re overweight, then your premiums are going to be around 50% higher than a person that is in a “healthy” weight range.

Another easy way to save money is to lay off the gas pedal. When the insurance company is reviewing your application, they are going to pull your driving records. If you have speeding tickets or accidents on your records, then the insurance company is going to view you as a high-risk applicant, which is going to translate into more expensive coverage. Slowing down on your way to work in the morning can save you hundreds of dollars every year, not to mention you won’t have to pay those expensive speeding tickets.

The best way to ensure that you’re getting the cheapest coverage is to compare dozens of quotes before you decide which one is going to work best for you and your loved ones. Every insurance company is different, and they are all going to give you different coverage. Instead of wasting hours and hours calling companies, let one of our independent insurance brokers do all of the hard work for you. We have years of experience working with quality insurance companies across the nation and we’ve helped all types of applicants get the perfect plan for you.

Explore all Possibilities with Life Insurance Beneficiaries

When deciding on life insurance beneficiaries, it is best to consider all possible situations. While it may become complex and it is grim to think of the future deaths of you or family members, all of these things do happen. Save your possible beneficiaries the trouble of having to dispute the distribution of benefits, and make sure to define the beneficiaries as specifically as possible.

Don’t use vague wording that may include or leave out people you don’t wish to.

You will want to make sure your benefits go to who you intend them to go after your death. Try speaking with a life insurance advisor to determine how to properly designate your beneficiaries.

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