How to talk to your family about life insurance
Talking about life insurance is definitely not a priority for many families. In fact, a State Farm study released in September 2013 found that parents would rather talk to their children about almost anything else, including drugs, alcohol, religion and politics.
Although talking about life insurance can be uncomfortable, it's also crucial, says Barbara McVicker, a Columbus, Ohio-based elder care expert and author. (insert image here, align right)
"Having conversations about topics such as life insurance and end-of-life-care is much easier to do before a crisis hits," McVicker says.
As a national speaker who also leads webinars on elder care topics, McVicker is often asked the best way to talk to your family about topics such as life insurance, elder care and disability insurance. She spoke to insuranceQuotes.com about how to make these difficult conversations easier.
When do families need to talk about life insurance, and who needs to be involved in the conversation?
It's a conversation that I had with my own parents and also with my children when they turned 21. My son is now in his 30s and is a certified financial analyst who enjoys jumping out of perfectly good airplanes and other extreme sports. I've spoken with my son about the importance of life insurance, as well as disability and catastrophic health insurance (a type of insurance designed to protect against unexpected emergency medical costs). Many young people don't think insurance is something they need, but accidents can happen at any age. If they purchase a policy when they're younger, it will be less expensive since the cost of life insurance rises as people age.
I also spoke with my parents about their life insurance coverage, and it was part of a series of conversations we had that included talking about their will, durable power of attorney and advance directives.
Durable powers of attorney allow a family member to make health care or financial decisions for a loved one in the event (he or she) becomes incapacitated.
Advanced directives are documents that contain specific preferences for care and treatment should an individual no longer to be able to speak for himself or herself. Having these conversations in advance can offer families peace of mind, knowing their family will be taken care of and their own wishes will be met.
How can families broach a conversation about life insurance?
Sometimes the best way is to begin a conversation and tie it into an event that's in the news or an anecdotal story about someone your family knows who died unexpectedly and didn't have life insurance. I broached the topic with my own family by saying, "I'm getting my papers in order, and let's make sure your papers are also done."
Sometimes it helps to have a third person in attendance such as a family attorney, insurance agent or financial planner, who can answer specific questions about whole versus term life insurance. (Whole insurance is written with the assumption that you will keep the policy for the rest of your life. Term life insurance covers you for a set period of time.)
What are some of the common mistakes people make when they have these conversations?
It's important to ask the right questions. You can't just ask your parents if they have a will or life insurance; you need to know where they keep their papers and what type of life insurance policy they have. Important documents also need to be revisited every couple of years. Beneficiaries may change when a person gets married or has children.
Talk to your family about how a life insurance policy can care for them in the event that a tragedy was to occur and you couldn't be there to care for them. Providing your family with financial security is one of the greatest gifts you can give them.
Are there any resources to help guide families in a conversation about life insurance?There is a great (downloadable) resource called Five Wishes, available free from AgingWithDignity.org that lets your family and doctors know the kind of medical treatment you want or don't want, who you want to make health care decisions when you can't make them. It's a good starting place if you are talking to your parents about elder care, or talking with your own children about your life insurance policy and how you want to be treated in the event you become seriously ill and can't speak for yourself. I also have a workbook on my website called "Before Things Fall Apart: The Essential Workbook on Caring for Mom and Dad," which contains all the necessary checklists needed to navigate elder care and document checklists to help families keep track of paperwork.