insurance benefits, death benefits, san antonio

Making financial decisions is a reality even in times of grief.
Prompt, sensible financial planning and timely actions can help you avoid or minimize potential financial hardships. It’s also vitally important to not overreact to potential financial problems and as a result make poor decisions that could have a lasting impact on your financial well-being. It’s also important that you not let others make financial decisions for you.

The following is a brief guide to help you make calm, rational financial decisions in the coming days, weeks and months following the death of a loved one. The guide is divided into three sections: financial actions that should be taken as soon as possible...in the coming weeks and months...and in the long-term.

What to do as soon as possible…
Perhaps the best advice is what NOT to do right away. Don’t make any hasty major financial decisions, such as changing investments, moving, changing jobs, or retiring early, unless it’s absolutely necessary. Defer all but the most essential financial decisions. This is the worst time to make decisions that have such a far-reaching financial impact. Many financial advisers recommend that survivors wait sometimes up to a year before making major decisions.

Instead, make a list of financial issues that will need to be addressed in the coming weeks and months, and focus on those actions that you must take soon or that lay a sound foundation for financial decisions that need to be made later.

Obtain multiple certified copies of the death certificate.
A death certificate opens the door to much-needed financial resources. You’ll need to file an individual death certificate to:
•   Apply for death benefits
•   Apply for retirement and Social Security benefits
•   Settle the estate
•   Assume sole control of assets such as bank accounts, investments,
    residence and vehicles, and a safe deposit box

Make funeral arrangements.
To help in this, find and read the will and any letter of instructions, which may provide funeral instructions and other guidance to survivors. Also, see if any advance arrangements were made with a funeral home.

Review living wills and powers of attorney.
Families of those severely injured should locate and read any living will, health care power of attorney and other related powers of attorney. These can help you make important decisions and, in some cases, provide you the legal authority to carry out vital financial actions.

Control spending and create an emergency fund.
Cash will be tight for many families (and perhaps remain tight) until additional financial resources, such as life or medical insurance benefits, become available. You may have lost critical income if your loved one was a significant earner. You may face new expenses, such as babysitting or housecleaning, as well as funeral expenses and other one-time costs. Identify current income sources you can depend on and try not to let expenses exceed that income. This is not a good time to run up debt.

Find immediate cash or assistance.
Whether or not you currently work, you may have more financial benefits and resources than you realize. Consider:
•   Personal savings accounts
•   Life insurance cash reserves
•   Local or state agencies
•   State unemployment compensation
•   Friends and relatives

CAUTION: Try to avoid dipping into retirement accounts or selling investments for cash.

Pay bills.
Quickly take control of bill paying if you were not doing that task previously. You don’t want to lose your good credit.

Continue health care coverage.
Don’t let coverage lapse for yourself or your children. If your health insurance coverage was through your loved one, contact his or her employer within 30 days of his or her death. You probably can continue coverage under the group policy, through what’s called COBRA, though you’ll have to foot the entire premium. Buy an individual policy if you can’t continue employer coverage. You can either buy it on the open market or perhaps by converting from the existing group coverage. You usually can get one without an exam or waiting period for pre-existing conditions as long as your loved one was covered under the group policy for at least 18 months.

For families who have their own policy, informing the carrier of your loved one’s death may reduce premiums.

Handle business affairs.
You may need to give some attention to critical management issues or other impending business transactions if the deceased or injured owned an interest in a business. Consult with the company’s attorney, any partners and key employees.

Notify financial institutions.
Notify banks, investment accounts, your mortgage holder, department of motor vehicles and other institutions of your loved one’s death as soon as possible. This reduces the potential for scam artists to use the deceased’s name illegally.

One exception to this, suggest some financial advisers, is your credit card company. You could lose the card or find the credit limit reduced if the card was issued based on your loved one’s income or two incomes.

Apply for death or disability benefits.
First, determine what benefits you are eligible for. This could take some effort, particularly if you were not previously managing the household finances.

For known life or disability insurance policies, contact your insurance agent or the company. If you can’t find the policy or aren’t sure what coverage your loved one had, dig through financial records, such as checkbook records for checks written to insurance companies. Talk to your loved one’s employer, parents and other relatives, attorney and perhaps seek professional advice.

You can also inquire about policies you can’t locate by calling the Life and Health Insurance Foundation for Education at 202.464.5000, or go to their Web site at www.life-line.org.

Note dates and names of all conversations when contacting representatives regarding what benefits are available and claim procedures.

Death benefits.
Major sources include:
•   Personal life insurance
•   Employee life insurance
•   Business ownership life insurance
•   Travel insurance
•   Social Security
•   Veteran’s or active-military benefits

Less obvious may be death benefits attached to credit cards, payment protection for loans such as auto and home, funeral homes, auto insurers, membership in labor unions, credit unions, or professional organizations, and previous employers.

Collecting life insurance benefits.
When applying for life insurance benefits, you may need to decide how you want to receive those benefits. Some of these decisions are irrevocable, so choose carefully, preferably after seeking independent professional advice. Options include:

•   Lump sum payment. Often this is the best option, unless you have
    creditors waiting in the wings or a large tax obligation.
•   Leave the benefits with the insurer. Leave the benefits with the insurer
    for a while and receive interest payments. You can take a lump sum
    payment later. Just be sure the financial health of the insurer is good
    and that you can’t earn higher interest elsewhere.
•   Installment payments. Installment payments of interest and principal
    over a period of time.
•   Annuitization. Many financial planners advise against this until you’ve
    had time to explore all the options in light of your particular needs.
    Annuitization is usually not always the best choice.