Common Fall & Winter Claims

In honor of Fire Safety Awareness Month, Janet talks about fire safety tips around the home.

You protect your kids in every way you know how. Or so you think! But what about life insurance protection? In this audio, Janet educates us about how beneficial life insurance can be for our youth!

What is a beneficiary?

A beneficiary is a person or organization that has been named to receive property, especially a trust, will, or life insurance policy, belonging to another individual in the event of their death. A contingent beneficiary, or secondary beneficiary, serves as a backup to the primary beneficiaries named on your life insurance policy. When you pass away, if all of your primary beneficiaries have also passed away, your contingent beneficiaries will receive the payout.

Life insurance proceeds are tax free to the beneficiary and are not reported as gross income. However, any interest received or accrued is taxable. Life insurance beneficiaries can be individuals, such as a spouse or adult child, or entities, such as a trust. For example, if you have minor children, you may choose to establish a trust and name it as the beneficiary of your life insurance policy. If you were to pass away, then the policy’s death benefit would be paid to the trust. The trustee would then manage those assets according to the terms of the trust on behalf of its beneficiaries (e.g., your children).

How difficult is it to designate a beneficiary?

Designating beneficiaries for your financial accounts involves providing the names, social security numbers and perhaps other specifics on a form when you open your account. If your accounts have been opened, simply request the appropriate form(s) for designating beneficiaries, fill it out carefully and properly, and return it to your financial institution.

Who can change the beneficiary on a life insurance policy?

In the case of a life insurance policy that has one or more revocable beneficiaries, the owner of the policy can change the beneficiary designations at any time. This is something that may be necessary if a beneficiary passes away or if the primary beneficiary is a spouse and the marriage ends in divorce.

If irrevocable beneficiaries are named to a life insurance policy, then the policy owner would need the consent of the beneficiary and any contingent beneficiaries to make a change. For that reason, it’s important to think carefully when choosing policy beneficiaries.

Pros and cons of designating a minor child as a beneficiary.

If you’re a parent, you should know that it’s possible to name a minor as your primary beneficiary, depending on your insurance company. But there may be some legal implications. Typically, an insurer won’t simply give your minor child the death benefit when you pass away. Instead, the court will likely need to appoint an adult custodian to manage the funds until the child becomes an adult. Unfortunately, this can be an expensive, time-consuming process. 

If you do go this route, your child will eventually be able to use the death benefit as they need to. Once the funds are transferred to them, upon turning 18 or 21 depending which state you reside in, they can use it to help pay for health insurance, college, or everyday expenses. This can give them the financial help they need once they become a young adult.

If you determine it doesn’t make sense to name your child as a beneficiary, consider these alternative options:

• Establish a trust – With a trust, you’ll have more control because you’ll be able to specify how you’d like your death benefit to be distributed. For instance, you may state that a portion of the funds be distributed for your child’s college when they turn 18, and then at age 25, they can receive the remaining amount to use in any way they wish.
• Designate your partner as a beneficiary – If you can, consider assigning your spouse or partner as the primary beneficiary. This way, they can continue to handle your household finances and save money for your child’s future. If both you and your partner pass away, the trust can kick in.
• Create a UTMA account – The Uniform Transfers to Minors Act (UTMA) requires you to name a custodian to manage your child’s assets until they become an adult. Then, the assets will be transferred to your adult child, who may use the funds in any way they choose.

What happens if I don’t choose a beneficiary?

If you don’t choose one or more beneficiaries for your assets, then the decision about what happens to your assets will be made by someone such as a financial institution or a court in the state where you reside.

The bottom line…

If you care about the distribution of your financial assets after you’re gone, then choosing beneficiaries for your financial accounts should be a priority. By designating beneficiaries, you can ensure that your property ends up in the right hands.

Are you one of the 19.3% of people in Arkansas driving around without insurance? Unfortunately it’s pretty common although it makes us agents cringe to think about. According to the Insurance Research Council, in many states over 20% of drivers are on the road without car insurance. So what happens if you get hit by one of the uninsured motorists? Hopefully you have the right coverage.

Some states require uninsured motorist coverage.

Some states mandate that car owners have uninsured motorist coverage (UM), which pays for medical expenses if you or your passengers are injured in a crash with an uninsured driver or a hit-and-run driver, or if another driver’s insurance company denies coverage or goes out of business.

Uninsured motorist coverage pays for your medical bills, lost wages, pain and suffering, and funeral expenses. It also provides uninsured motorist property damage (UMPD), which helps repair your vehicle if it’s damaged by an uninsured driver or a motorist who doesn’t have enough liability coverage.

And if you are ever in an accident with an UM, here are some tips on what to do.

UM Coverage Requirements By State

State	Requirements for buying UM or being offered UM	Minimum UM coverage amount	Is uninsured motorist property damage coverage required? If so, minimum coverage amount.
Alabama	Must be offered	25/50	No
Alaska	Must be offered	50/100	You can reject UMPD in writing; $25,000 minimum if you buy it
Arizona	Must be offered	UM 25/50	No
Arkansas	UM must be offered. UIM must be offered if you buy UM.	UM – 25/50	You can reject UMPD in writing; $25,000 minimum if you buy it
California	Must be offered	15/30	You can reject UMPD coverage
Colorado	Must be offered	25/50	May be offered at your request
Connecticut	Must be offered	25/50	No
Delaware	Must be offered	25/50	Acceptance of UM includes UMPD; $5,000
District of Columbia	UM is required	UM – 25/50	Yes; $5,000
Florida	Must be offered	10/20	N/A
Georgia	Must be offered	25/50	Yes; $25,000
Hawaii	Must be offered	UM – 20/40	N/A
Idaho	Must be offered	UM – 25/50	N/A
Illinois	Required	UM – 25/50	UMPD must be offered if you do not have collision insurance (you can reject in writing); $15,000
Indiana	Must be offered	UM – 25/50 UIM – $50,000	You can reject UMPD; $10,000
Iowa	Must be offered	UM – 20/40	N/A
Kansas	Required	25/50	N/A
Kentucky	UM must be offered; UIM is available upon request	25/50 or a $60,000 single limit for both UM and UMPD	N/A
Louisiana	Must be offered	15/30	UMPD available but not required
Maine	Required	50/100	N/A
Maryland	Required	30/60	UMPD is required; $15,000
Massachusetts	Required	20/40	N/A
Michigan	No requirement	N/A	N/A
Minnesota	Required	UM – 25/50	N/A
Mississippi	Must be offered	25/50	UMPD can be rejected; $25,000 minimum if you buy it
Missouri	UM required	25/50	N/A
Montana	Must be offered	25/50	N/A
Nebraska	Required	UM – 25/50	N/A
Nevada	Must be offered	25/50	N/A
New Hampshire	Must be offered	25/50	Yes; $25,000
New Jersey	Required on standard policies	UM – 15/30	Yes; $5,000
New Mexico	Must be offered	25/50	Yes; $10,000
New York	UM required, UIM is optional	25/50 for injury, 50/100 for death	N/A
North Carolina	UM required. UIM required if UM coverage exceeds 30/60	UM – 30/60	Yes; $25,000
North Dakota	Required	25/50	N/A
Ohio	An insurer decides whether to offer it	25/50	Available upon your request, not to exceed $7,500
Oklahoma	Must be offered	25/50	N/A
Oregon	UM is required. UIM is required if UM coverage is more than 25/50	25/50	Yes; $20,000
Pennsylvania	Must be offered	15/30	N/A
Rhode Island	Must be offered	25/50	Not required but $25,000 minimum coverage if you buy it
South Carolina	UM is required	25/50	Yes; $25,000
South Dakota	Required	25/50	N/A
Tennessee	Must be offered	25/50 or a $60,000 single limit	Yes; $15,000
Texas	Must be offered	30/60	Yes; $25,000
Utah	Must be offered	25/65 for UM; 10/20 for UIM	Required if you do not have collision coverage
Vermont	Required	50/100	Yes; $10,000
Virginia	Required	30/60	Yes; $20,000
Washington	Must be offered	25/50	Required if you don’t have collision coverage, minimum of $10,000 in coverage
West Virginia	UM is required; UIM is optional	25/50	Yes; $10,000
Wisconsin	UM is mandatory	25/50 for UM; 50/100 for UIM	N/A
Wyoming	Must be offered	25/50	N/A

Source: American Property Casualty Insurance Association