This is the second post in a long sequence where I want to share stories of real people I have met either while working with a life insurance company, or as an independent investment adviser. My goal is to share their stories so I can impart the lessons I learned in the hopes that these lessons will also serve others - this is for you, my readers!
*All my subjects will be either John or Mary, for privacy reasons.
Today I have on my mind a couple of stories related to the second big mistake people make when it comes to life insurance. The first mistake is that they don't have any life insurance, even though the family needs the protection life insurance offers, since the estate is not big enough (at least for the time being) to take care of the family in case the unexpected happens. The second mistake is that John (or Mary) has life insurance but nobody in the family knows where the policy is or what company it is through. Unfortunately, this mistake is quite common, especially in situations where all the children are grown and live away from the parents' home, and the parents are still in great shape - physically and mentally.
Since none of us can guess when we pass away, or whether we will have time to plan everything while being sick, or we might have an unexpected end, it is best to have all the paperwork in place for those we leave behind; and most importantly, let them know where everything is and who they need to contact. If you are not sure how to keep track of your important papers and where to do it, I can share a document I created for women who want to take charge of their financial life. Please contact me via this site and let me know you want my help with this. I promise you will not receive a bunch of unwanted emails later.
While working with the life insurance company, I met a family that had recently taken care of the funeral for the grandfather of the family. Mary shared with me on that occasion that she and a cousin had been in charge of finding the life insurance policy that her husband's grandfather had had. They spent many hours in a room full of papers or all sizes and colors. This is how she learned that the elderly preserve all papers that were once important, even though they were no longer needed. The expected and much needed life insurance policy was never found.
Many years ago, one of my clients, Mary, had to deal with all the financial consequences of her mother's passing. She called me to ask how she could find out what life insurance company her mother might have had a policy with. I still remember her exact words to me, even these 10 years or so later. She said: "Knowing my mom, I'm sure she had a life insurance policy. I just cannot find any papers in her house. Is there a way to find out which company she had her policy with?"
And I had to tell her that there was no central place where this info would be listed. Sure, it seems logical to protect this personal info. However, even with providing all sort of security questions or info that nobody else can have, there is no way for a family member to find out in one place about someone's life insurance policies. The only idea that crossed my mind at the time was that she could call various life insurance companies and ask. There were 2 major challenges with her predicament: 1. she would have to spend a long time talking to each company while answering a lot of questions to prove the legitimacy of her question, while still not knowing whether she had the right company; and 2. she would never have the certainty of knowing for sure that her mother didn't have a life insurance company, since she would never call all the companies in the United States.
All this happened because Mary's mother didn't have any records regarding life insurance policies. There were no directions for Mary to follow upon her mother's death. And there were no electronic drafts by a life insurance company from the mother's bank account. At least this second element would have helped a lot with the search.
I hope these stories gave you some food for thought, maybe even some dinner conversations with your family - whether you need to tell your family where to find your documents or whom to call, or to learn from your parents and grandparents what you need to do when they pass. I know this is not an exciting topic (it is even scary, perhaps) but I can assure you there will come a time when you are happy to have had this conversation, especially if you are the one left behind to face the passing of a loved one.
With the holidays coming up, this may be your best opportunity to tackle the subject with your family. According to the Chinese, "the best time to plant a tree was 20 years ago; the next best time is now."
Please remember this:
The best time to talk about painful things and about complicated financial things is when you have a clear mind and all your loved ones around you, and not when you are emotionally drained, or even in no shape physically or mentally to deal with final arrangements for a loved one.