Life insurance is essential for parents.  The main reason for life insurance is to replace the income you provide to your family upon your death.  Your young children depend on you for their standard of living.  Considering this, it only makes sense for you to name your children as your beneficiaries of your life insurance policy, right?  Not necessarily.

Life insurance companies will not write a check worth thousands, or perhaps millions depending on your policy’s death benefit, of dollars to a minor child.  If you name your child beneficiary to your policy and they are not yet legal adults when you die, the court will appoint a property guardian to manage these funds until your child reaches legal age.  This court process requires attorney fees, court proceedings, and court supervision of life insurance benefits – all of which take time and money.

There are three other options we recommend to avoid all the court hassles.

1. Name a trusted adult instead. You can name a trusted adult to be the beneficiary of your policy who will use the money for your children’s benefit.  If you are confident that this adult will not waver from his/her duty this might be the easiest option.
2. Use a living trust. If you have a living trust, you can name your minor child beneficiary to its assets.  Then you can name the trust the beneficiary of your life insurance policy and the designated trustee will manage the funds on behalf of your child.
3. Utilize UTMA/UGMA. You can name your minor children as your life insurance policy beneficiaries under your state’s Minors Act.

What are UGMA and UTMA?

The Uniform Gifts to Minors Act (UGMA) was proposed in the 1950s to overcome problems that were associated with making gifts to minors.  UGMA provided statutory language that allowed more gifting flexibility.  In the 1980s, the Uniform Transfers to Minor Act (UTMA) was proposed.  It allowed even further flexibility in regards to the kinds of property that could be transferred to minors.  UTMA has been adopted in 48 states while UGMA still remains in effect in South Carolina and Vermont.

How do UGMA and UTMA work?

UGMA provides a simple and inexpensive method of transferring certain property to minors by means of custodian arrangement.  Generally, UGMA allows the gifts of money and securities, however, some states have amended their statues to permit gifts of life insurance and annuities.

Under UGMA, custodianship is similar to that of a trustee except, unlike trust arrangements, the custodian does not take legal title to the property.  The minor is the owner of the property and will be included in the minor’s estate in the event of his or her death prior to termination of the arrangement.  The custodial arrangement ends when the minor reaches the age of 18 or 21, depending on the state.

Some states allow any adult to act as custodian while other states restrict custodians to the child’s legal guardian, parents, grandparents, siblings, uncles and aunts.  When a custodian dies or resigns, the minor may designate another custodian if the minor is over the age of 14 and if the original custodian has not already named a successor.  Alternatively, when a custodian wants to resign, he/she may petition the court to designate a successor.

If the custodian dies while the minor is under the age of 14, the child’s guardian becomes the successor guardian.  In there is no guardian, the court will commonly appoint another custodian from among adult members of the minor’s family.

Under UTMA, the only major difference from UGMA is that UTMA removes property limitations and allows gifts from trusts, estates and guardianships, depository institutions, and insurance companies.

To summarize:

Step 1 – Donor transfers property to a custodian to be held for the benefit of the minor.

Step 2 – Custodian can use the property and any income that property produces on behalf of the minor.

Step 3 – At age 18 or 21, the custodian must transfer the property outright to the (former) minor.

How to Designate the Policy Beneficiary

When wanting to designate a minor as the beneficiary of a life insurance policy, the following language is typically used.

Example:

I, John Smith (donor), have delivered to Jane Doe, as custodian for Sam Smith (minor), a life insurance policy on my life in the face amount of $500,000 issued by the ABC Life Insurance Company and payable to Sam Smith.  The transfer is made under the Minnesota Uniform Transfers to Minor Act.

_________________________
(Donor’s signature and date)

I, Jane Doe (custodian), acknowledge receipt of the life insurance policy described above, and agree to hold this policy as custodian for Sam Smith under the Minnesota Uniform Transfers to Minor Act.

___________________________
(Custodian’s signature and date)

Some choose to forgo UTMA/UGMA in lieu of a trust.  With a trust, you can specifically state how much will be transferred to the beneficiary and when.  With UTMA/UGMA, the minor beneficiary will receive the entire sum as soon as they reach legal age.  If the sum is great, many opt not to let an 18-year-old or 21-year-old have all that money in one fell swoop.

Not sure if you should name your minor a beneficiary of your life insurance policy?  Not sure if you should utilize UTMA or a trust?  Contact us and we can advise you.  Our insurance team has years of experience working with families.

Already know what you want to do?  Start the process by running a term quote or using our needs analysis calculator to determine how much coverage you should buy.  We look forward to assisting you in protecting your loved ones.

Quotacy is not a lead generating company nor do we buy leads from lead generating services.  Before we get into what that means, I want to explain what lead generation is.  Lead generation is the use of a source, such as a computer program, database, the Internet, or service, to obtain or receive information for the purpose of expanding a business and increasing revenue.

The Three “Old” Ways of Selling Life Insurance 

1. Selling Door-to-Door

Back in the day, life insurance agents would build their clientele by going door-to-door selling life insurance policies.  This method has died off since much of America pretends they aren’t home when their doorbell rings (unless it’s the pizza guy.)

2. Buying Leads

Nowadays it is common for life insurance agents to buy leads from services.  Basically these “leads” are a big list of names and phone numbers of individuals in the right age group for life insurance.  Agents then begin to reach out to everyone on their lists in an effort to sell life insurance.  There is a need for life insurance and many families either are underinsured or don’t have any coverage at all; however, many people are turned off by getting cold calls.

3. Online Data Collection

There is another method of obtaining leads that is commonly seen online.  People browsing online come along an advertisement that reads “Get a free life insurance quote! Click here!”  The website then asks for a name, phone number, e-mail, home address, your first born, and birthday before you can even see the quote.  Some companies will show you estimated life insurance prices after you fill out this form and some will bring you to another screen that then reads “Someone from a life insurance agency will be calling you with your free quote.”  Either way your phone and inbox are going to become saturated with agents contacting you to try and sell life insurance.

Don’t get us wrong, we think life insurance is extremely important.  But we also thought the way life insurance was sold needed to be brought into the 21^st century.  We decided to do something about it.

Quotacy is the New Way to Buy Life Insurance

When we ask if you want a free quote we mean free.  You actually run your own quote and you don’t have to pay via contact information.  Convincing someone to face their own mortality and buy life insurance is challenging enough… why make it harder just to get a quote?

When you come to our website to run a term life insurance quote, all you need to do is put in your zip code, gender, and birthdate.  That’s it.  Just three pieces of information and then you see estimated prices instantly.

To narrow your price down even further you just have to answer a few more questions and you will see the names of all the life insurance carrier options and their price estimations – this is still provided instantly even without your contact information.  When you decide to apply is when we need your contact information, but even if you decide not to continue the process with us down the road, we don’t sell your information off to third-parties.

We strive to make life insurance easy and transparent, and our positive customer ratings reflect this.  We hope the way we do business sells itself and that the need for buying leads will become a thing of the past.  We aim to put the customer first, not revenue or sales commissions.

Buying life insurance through Quotacy is easy, secure, and hassle-free.  See for yourself by running a truly free term life insurance quote today.

Many people make the assumption that life insurance is for married couples and those with kids. While it is true that not all single people need life insurance, there are a number of reasons when it can make (really) good sense.

1. You have student loan debt. Many people assume that your debt dies with you, but that’s not always the case. While the loans through the federal government are discharged (aka forgiven) if you were to die, personal loans that have a cosigner are generally not. That means if your parents, for example, co-signed your student loan through a bank, they would be responsible for paying the rest of the loan if something happened to you. There are instances when the bank has called for the loan to be paid in full immediately following a death. You don’t want to leave your parents dealing with grief and loan payments.

2. You’re living with your significant other. When you’re living together, a lot becomes shared financial responsibility. Consider this example: You need both your incomes to meet the mortgage or rent where you’re living. Have you thought about what happens if one of you dies prematurely? Would the other partner have to sell up? Find a new place to live immediately? And this is just one example of many shared financial responsibilities couple have. Adequate life insurance is an easy answer to those questions.

If your parents co-signed your student loan through a bank, they’d be responsible for paying the rest of the loan if something happened to you.

3. You plan on having kids … someday. It may not be now, but when kids do come, so do the expenses and bills. According the USDA, it costs $245,340 to raise a child to age 18, and that’s without factoring in the cost of college. Getting life insurance in place now means you have coverage in place for when you do have a child. Plus, you protect your insurability for the future. … and that leads us to the next reason.

4. You’re young and healthy. Age and health are two major drivers of how much you’ll be paying for life insurance. Why not lock in a low price if you have both of those working for you? Did you know that a health 30-year-old can get a 20-year $250,000 term life insurance policy for about $13 a month? Doable, right? Don’t wait until a health issue or age puts life insurance out of your reach.

5. You know you’ll be taking care of family members in the future. This may mean aging parents or perhaps you have a special-needs sibling that you help care for and support financially. What would happen to them if something happened to you and your support disappeared? Life insurance can ensure that there is money in place to fund those needs into the future. This is where it might be wise to consider a permanent life insurance policy (one that’s there for your lifetime, as long as you pay your premiums).

6. It will pay for your funeral. No one likes to think about such things, but the truth is if you die, someone will have to pay for your funeral. You wouldn’t want to leave your parents, partner or other family members struggling with grief as well as paying for a funeral and burial, which can cost an average of $7,100.

Getting life insurance doesn’t have to be a daunting task. A life insurance agent can walk you through your options—free of charge.

Depending on where you live it may not feel like it, but it is officially springtime!  Spring is one of my favorite times of the year.  They say New Year’s is the time when you can start fresh, but I think spring is.  The flowers start fresh, why can’t we?  Typically springtime is when you start prepping your garden and airing out the house, but what about sprucing up finances?

Five Areas That May Need a Financial Spring Cleaning:

1. Banking
2. Budget and Debt
3. Estate Planning
4. Retirement accounts and investments
5. Insurance

Questions to Consider About Your Banking

Has your filing cabinet become flooded with different bank statements you’ve been holding onto for safe keeping?

Financial planner Suze Orman recommends keeping bank statements for a year, and then you can toss them.  If you need them for tax purposes, however, three years is an adequate amount of time.

Do you have accounts at multiple banks?

Some people keep money divided up between many banks simply because they wanted to take advantage of new account promotions.  It’s easier to collect fees, however, if you’re utilizing different banks: overdraft fees, minimum balance fees, credit card interest fees, etc… streamlining accounts will make managing your money much easier.

Also, make sure your bank is working for you.  In today’s competitive banking market, there is no reason you should not be making money on your money.  Shop around for the best offerings.  A bank I personally love is the online bank Ally Financial.  They offer an interest checking account that has no monthly fees, yet still lets your money build interest.

Are you still getting paper bank statements in the mail?

Save a tree and lower your risk of identity theft by switching to receiving online statements only.  If you prefer to have a paper copy, make sure you shred the statements before tossing them out.

Have you ever had to pay a late payment fee only because you forgot to pay a bill?

Switch to autopay whenever the option is offered.  American households tend to have many different bills to pay all due at different times, it’s easy to accidentally overlook one.  If you switch to an autopay billing option, payments are deducted automatically when they are due so it’s one less thing to worry about.  Just be sure to occasionally review your statements to ensure the right amounts are being deducted.

Questions to Consider About Your Budget and Debt

What’s your debt-to-interest ratio?

If you don’t know this number, do a couple calculations to find out.  Bankrate.com has a debt-to-income ratio calculator that can do the math for you.  This number is important to lenders.  It basically proves you don’t needlessly spend money you don’t have.  The ideal number to stay below is 36.

What’s your credit score?

If you don’t know this number, find out.  You may obtain a free copy of your credit report every 12 months.  You can do so securely at websites such as annualcreditreport.com.  Monthly monitoring of your credit score is also recommended.  CreditKarma is a free app you can download on your phone which lets you easily track your credit score.

Do you owe on credit cards?

Tackle the highest interest debt first and get rid of it as quickly as you can, then move onto the card with the next highest interest.  If consolidating is an option for you, this could be the best way to save on interest.  Consolidating credit card balances onto one low-rate card can make paying off the balance much more manageable, but be sure to read the fine print to avoid transfer fees, introductory rates that expire, minimum monthly charges, etc.

Questions to Consider About Estate Planning

Do you have a will?

If you own anything, you should have a will.  If you have children, you need a will.  Drawing up a will isn’t complicated; you just need to set time aside to do so.  U.S. News has an article that can help you start the will process: 10 Steps to Writing a Will.

Have you named a financial power of attorney?

A financial power of attorney is someone whom you designate to oversee your finances if you are not able to do so.  If you could not physically or mentally handle your financial affairs, this person would take over, or even something as simple as distance being a factor.  For example, a few years ago I moved from Minnesota to Montana, but I was in the process of selling my home in Minnesota, so I named my step-father my financial power of attorney to take care of the real estate closing since I was about one-thousand miles away.

Have you named a medical power of attorney?

Similar to financial power of attorney, but this individual oversees your medical treatments when you are not able to.  Medical power of attorney only goes into effect if you do not have the capacity to make your own decisions.  Medical and financial powers of attorney are often the same person, such as a spouse or adult child, but this is not mandatory.

Questions to Consider About Your Retirement Accounts and Investments

Do you have more than one 401(k) or IRA?

Consolidating retirement accounts that share the same tax treatment can be beneficial for two reasons:

1 – Keeping all your money in one place makes it more simple and manageable.
2 – Having only one account reduces the amount of fees you’re paying.

A retirement rollover is the best way to move money from one account to another.  It’s important to do so correctly to avoid fees.  Check out this blog post for more information: How to Handle Retirement Rollovers Correctly.

Do you need to rebalance your investments?

Typically, the younger you are the more risk you can handle in your investments because you have more time to make up for any losses.  The closer you get to retirement age, the more conservative you should be.  Financial planning experts recommend that you rebalance your portfolio once or twice a year, but check up on it frequently to make sure you’re in line with your target.

Who are your beneficiaries?

How long ago did you open your retirement accounts?  Are your parents still listed as your beneficiaries on your 401(k) from your first job?  Or maybe an ex-spouse is still designated.  Review your designated beneficiaries – it may be time for an update.

How much are you contributing to your retirement accounts?

You probably read about it weekly: Americans are not saving enough for retirement.  At least contribute enough to meet your employer’s 401(k) match, if they offer it.  Then aim to increase your contributions each time you get a pay raise, this way you won’t even miss the money.

Questions to Consider About Your Insurance Plans

Have you been putting off buying life insurance?

While many Americans admit life insurance is important, households are underinsured.  People are telling themselves “It won’t happen to me,” meanwhile they really should be asking “What if?”  Could your loved ones maintain their lifestyle if you died and your income was suddenly gone?  Stop postponing and get a term life insurance quote today.  Applying for life insurance online through Quotacy takes less time than it does to clean out the gutters.

When was the last time you reviewed how much your premiums cost?

It doesn’t hurt to get new quotes for your car, home, or life insurance policies.  The costs of these policies have decreased over the past few years, so if you’re still paying premiums of policies you opened over five years ago, you might be able to save yourself some money by obtaining new quotes.

Have you had any recent major life changes?

Big life events mean you should review your current policies, especially your life insurance.  Changes such as a new baby, a bigger home, or a new job may require additional coverage.  A divorce or death in the family may require beneficiary changes.  It’s recommended that you review your life insurance policies annually to ensure your wishes are carried through correctly when you die.

Whether all of those questions applied to you or just a handful of them… there’s no time like springtime to clean your financial house

Several years ago, one of my husband’s friends from high school and his wife lost their teenage son in a vehicle accident. Their son and three of his high school friends (all much-loved football players with bright futures ahead of them) perished after their car hit a bump on a back road and the boy who was driving lost control.

Although I saw first-hand the debilitating grief of my husband’s friend’s family, I can’t pretend to know how difficult it would be to be in a similar situation. It’s unfathomable to me. The mere thought of losing a child to illness, accident, or any other tragedy reduces me to tears. How parents who have experienced that loss find the strength to overcome the devastation is beyond my comprehension. I imagine the emotional impact, regardless of how much love and support you receive, would be overwhelming.

While none of us as parents want ever to think about losing our children, the reality is we can never know what hand life will deal us. So much is out of our control—including how we might react and recover.

I used to think it was sort of creepy to consider life insurance for children, but with the severe emotional anguish that would accompany the death of a child, it’s understandable that financial

hardship might follow, as well. Life insurance for children won’t help parents mend their broken hearts, but it might help ease some of the monetary challenges they face.

Cost of Final Expenses

According to the National Funeral Directors Association, the cost of an average funeral in 2012 was approximately $8,343. That’s a significant expense, even for people who have a decent emergency fund. With a life insurance policy, families can more easily afford to cover final expenses.

Loss of Income During an Indefinite Grieving Period

According to QuickQuote’s President, Tim Bain, this is the primary reason parents might consider life insurance for their children.

“I cannot imagine the grief I would experience if one of my children were to die. And returning to work would be the furthest thing from my mind. How long would it take before you could effectively return to work? A week? A month? Longer?”

Bain also asks, “Would your employer, customers, or clients give you the time you need to grieve? If so, at what cost?”

A life insurance policy on your children can offset the loss of income you might experience by taking an extended absence from work.

Support and Counseling Costs

After a tragedy of such magnitude, families often need counseling to help them deal with the loss. Unfortunately, not all health insurance policies provide sufficient mental health benefits to cover related costs. Life insurance policy proceeds can help cover the cost of such services so your out-of-pocket expenses are more manageable. 

About Term Life Insurance to Cover Your Children

As you consider investing in life insurance to cover your children, you’re likely sensitive to the potential premium costs. After all, raising a family isn’t inexpensive and a high life insurance premium may not work well with your budget. Fortunately, most insurance companies that handle term life policies provide you with the option to purchase term life on your children in the form of a rider on your own policy.

According to Bain, “A rider is simply additional coverage added to a policy to insure something other than the primary insured’s life. As an example, imagine adding a jewelry rider to a homeowner’s policy to insure expensive items beyond what the base policy provides. It’s the same concept with a children’s term rider.

These riders vary slightly by the company, but they provide similar coverage at comparable costs.”

Important to note is that one rider will cover all children in your family. So if you’re paying $60.00 for a $10,000 child term rider, the death benefit is $10,000 for each child, regardless of whether you have one, two, five, or even more children. Some riders extend coverage to adopted and stepchildren as well.

Preparation, not Premonition

Considering life insurance for your children doesn’t mean you’re expecting or willing the worst to happen to your loved ones; it simply means you care enough about your family to ensure you’re prepared for anything.

If you’d like to learn more about term life policies and child term riders for you and your loved ones, talk with a trusted professional who can answer all of your questions.

Nobody likes paying for term life insurance — or any type of insurance for that matter. We all want to see something of value in return for our hard-earned money. Some forms of insurance show their value more regularly. Think medical insurance, for example. But with term life insurance there’s only one way to realize the value and get the benefit. Yeah, that’s the one.

Since none of us want to leave our loved ones unprotected, we’ll need to pay for a life insurance policy at some point. When that time comes for you, you’ll need to decide how to pay for your policy. Choose wisely and you can save yourself some money. Here’s how to do it.

Premium Payment Modes

When you apply for a life insurance policy, you’ll be asked to select the “premium mode” you prefer. “Premium” in this sense just means the cost of the policy. Insurance companies often like to use complicated words (premium) when easier ones (cost) will do just fine. The “mode” is simply the frequency of premium payments, with the options being annually, semi-annually, quarterly, and monthly.

The least expensive payment mode is annually. The most expensive is quarterly (sometimes monthly, but this varies by company). The reason for this is because life insurance companies add a small surcharge to the policy cost to cover administrative costs associated with billing and processing payments. The more times they have to send you an invoice each year, the more it’s going to cost you.

You might be wondering (probably not, but humor me anyway) why monthly isn’t the most expensive payment mode. Well, the monthly mode is unique in that nearly all life insurance companies require monthly payments to be set up as an automatic draft from a banking account. They will not bill you directly for the monthly mode. For many people, this is okay — and often preferred. But others do not like electronic funds transfers from their accounts. If this is a deal-breaker for you, you may want to choose a different payment mode.

So, how much more money are we talking about here? It’s a flat percentage that varies by company, but this example should give you a good idea of the difference:

The amount may be negligible on smaller policies and significant on larger policies. Regardless, money is money, and we’d all like to keep as much as possible in our own pockets. So, if you can swing it, pay annually. It will save you money in the long run.

Types of Premium Payment

The life insurance industry is stuck in the dark ages in several areas. One such area is acceptable payment types. Do you like paying online with PayPal? Me too, but it’s not an option. How about Apple Pay? Google Wallet? Sorry.

Even credit cards are usually frowned upon (read:  not accepted) in this establishment. However, many companies will allow you to charge the very first premium payment only. Not likely to earn massive reward points with that. But, it can be a convenient way to get your policy coverage started quickly, which is what many people opt to do.

For regular premium payments, you have two choices: 1) paper check, and 2) electronic funds transfer (EFT). That’s it. You can usually set up EFT for any payment mode you choose, and it’s required for monthly. The only exception I am aware of is Transamerica Life, which will bill you monthly if your monthly premium amount is over $100.00.

To sum it up, types of acceptable payments are:

• Paper check
• Electronic funds transfer (annually, semi-annually, quarterly, and monthly)

Types of unacceptable payments are:

• Everything else (This includes anything developed this century, cash, coins, money orders… You get the idea.)

In all seriousness, selecting your payment mode is not a critical decision to make when applying for term life insurance. If you know you want only to be bothered with it once a year, or want to save as much money as possible, then select annual. If you’d rather not see it or deal with it all, a monthly draft may be right up your alley.

Regardless of what mode you choose, remember you can easily change the mode at any time by simply completing a form. It may be a 3-ply carbon-copy form that you have to get notarized and physically mail to the company with a real stamp, but I digress.