If you’ve ever thought about making a will but put it off for another day, you’re not alone. It’s one of those tasks that many people push down the priority list, especially if life is busy and everything seems fine. However, if you have life insurance, having a will is more important than you might think. Let’s dive into why having both life insurance and a will go hand in hand to protect your loved ones.
What Does Life Insurance Cover?
Life insurance is a way to provide financial protection for your family when you pass away. Typically, it pays out a lump sum to your loved ones, which can help cover things like funeral costs, mortgage payments, or simply provide some financial security during a difficult time.
There are different types of lump sum insurance, such as trauma cover or policies that pay out if you become terminally ill. In these cases, your will might not be as urgent at the time of a claim, but it’s still important to have one in place. When it comes to life insurance payouts after death, a will plays a huge role in making sure everything goes smoothly.
The Importance of a Will
So, why is a will so important when you already have life insurance?
When you pass away, if you don’t have a will and your estate (everything you own) is worth more than $15,000, things can get tricky. Without a will, your estate can’t be distributed to your family or next of kin without going through the courts. This process is known as dying “intestate,” and it can be a stressful, and expensive journey for your loved ones at an already challenging time.
On the other hand, having a will ensures:
- Avoiding legal complications: A will clearly outlines who gets what, so there’s no confusion or disputes over your assets.
- Faster claims processing: Life insurance payouts can be made more quickly when there’s a will in place, meaning your loved ones get the support they need without unnecessary delays.
- Appointing guardians for your children: If you have young children, a will allows you to legally name guardians who will care for them if something happens to you.
- Fair distribution of your estate: You get to decide exactly how your assets are shared, rather than leaving it up to a court to decide.
How and When to Create or Update Your Will
If you don’t have a will yet, now is a great time to get started. It’s a simple process that will save your family from potential legal headaches down the road. If you already have a will, consider updating it whenever major life changes happen, like getting married, having children, or buying property.
For more guidance, check out our article on ‘Why you need a will, and how to write one.’
The Bottom Line
If you’ve taken the important step of getting life insurance to protect your loved ones, make sure you complete the process by having a will. In short, having both life insurance and a will in place offers you and your family the peace of mind that no matter what happens, there will be financial support when they need it.“
