Life insurance

Three Things Dads Need to Know About Life Insurance

Whether you are a single dad or married and co-parenting your kids, life insurance plays an important role in financial planning for your family. Here are three tips for dads to help guide their decision-making around life insurance.

Life Insurance Guarantees an Income Stream

The entire point of obtaining a life insurance policy is to replace your income if something happens to you. Whether you are married and the higher-income earner of the two of you, or you are divorced and required to maintain life insurance as part of the family court’s support order, life insurance delivers some security for your dependents.

But how much life insurance to get? Conventional wisdom dictates that anywhere from 10 to 15 times your annual income is sufficient.  However, you should also consider your family’s lifestyle and the ages of your children. If your children are young, you will need to plan for a larger life insurance benefit to provide for their long period of dependency. If your children are older and university-bound, you need to take this into consideration as well.

Your Life Insurance Application Must Be Accurate and Thorough

You’ll be required to complete an application in which you disclose your medical history as well as aspects of your lifestyle.

Your medical history should include every and all medical conditions and surgeries, even if you have fully recovered. If there is no logical space to disclose past illnesses or procedures, talk with your insurance agent about whether an additional statement should be included.

The insurance provider will want to know about certain aspects of your lifestyle; namely if you engage in any activities that they consider high-risk. Activities such as sky-diving, hand gliding, and participating in ironman triathlons may be considered high-risk. Take a look at the policy — as every provider has a different definition of “high-risk” you may be able to find a policy that does not consider your hobby or sport high-risk.

Insurance providers also want to know about where you travel and for how long. There are destinations that are considered riskier than others — for example, a war zone is obviously risky, but also countries where there is insufficient coverage by medical professionals, or, countries experiencing wide-spread disease or damaged infrastructure from some natural disaster like earthquake or flood, will be considered high-risk.

As every provider has a different definition of “high-risk” you may be able to find a policy that does not consider your hobby or sport high-risk.

Remember, it’s not that you won’t be able to obtain insurance if you’ve had a medical condition or procedure, or if you engage in a high-risk activity, or if you travel to a high-risk place: more likely that you’ll be charged a higher premium. Just know that certain activities, conditions, or travel destinations can be “excluded” from coverage, so read the policy carefully.

If you fail to disclose any of the above and then die, your insurance provider can deny your beneficiaries’ application for death benefits on the grounds of misrepresentation on your application.  Be sure to be accurate and thorough in filling your application out to avoid problems for your beneficiaries.

Life Insurance Has Exclusions and a Contestability Period

As noted above, certain conditions, activities, and travel destinations will be expressly “excluded” from coverage under your policy, meaning, if you die due to that condition, activity, or while at that destination your beneficiaries will not receive the death benefit. So, shop around for a policy that will cover you, all that you are and all that you do.

Additionally, most life insurance policies provide for a two-year “contestability period” during which the insurance provider has heightened power to investigate your death and the facts underlying your disclosures on your initial application for insurance. If you neglected to disclose something asked for on the application, the insurance provider can deny your beneficiaries’ claim on that basis.

Consult with a local life insurance agent for what sort of policy and how much would be right for your family situation.  You will be glad you did.

Veronica Baxter is a blogger and legal assistant living and working in Philadelphia, USA. She regularly works with life insurance attorney Chad W. Boonswang, Esq.


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