How retirees should plan ahead with home insurance
July 14, 2016
As the population of the United States gets older, issues surrounding how to tend to important financial matters are beginning to come up more frequently.
As the population of the United States gets older, issues surrounding how to tend to important financial matters are beginning to come up more frequently. As difficult as they are to initiate, married couples enjoying retirement must begin putting their finances in order in preparation for the end of their life. And since their home is probably their biggest asset, it is especially important that retirees get these issues sorted out.
According to the U.S. Census Bureau, 78 percent of Americans age 65 or older own a home. Chances are, these homeowners also have an insurance policy on that home. While it can be difficult to deal with finances and paperwork immediately after a family member passes away, taking care of the homeowner's insurance could be easily overlooked. To prevent this from happening, families should include their insurance in their estate plans and end-of-life strategies.
With a surviving spouse
"It's important to plan for insurance issues before they come up.”
In most home insurance policies, the name and information of the owner's spouse is known to the provider. According to NASDAQ.com, it is standard for an insurance company to allow for the policy on the home to transfer over to the surviving spouse if one of them passes away.
As Asher noted, the home insurance policy will be easily transferred to the other member of the couple, as long as the surviving spouse continues to make regular payments. However, the surviving family member should be sure to contact the insurance company as soon as he or she is able. Asher remarked that most insurance providers require notification of a policyholder's passing within 30 days.
Without surviving spouse
If both the original owner of the policy as well as their spouse have passed away, the process for handling the home insurance policy could become more complicated. Consumer Reports stated that in these cases, the responsibility of the policy will fall to the legal representative of the estate. In many cases, that could be surviving children or other close family members.
Once again, the insurance provider or agent should be notified of the death as soon as possible. To transfer the policy, insurers will generally require a death certificate as well as a letter of administration, which proves that the heir is the legal decision-maker for the estate. After this point, the insurance will continue until it is canceled or reaches its expiration date.
As the manager of the estate, the heir or other legally appointed person will need to keep making premium payments on the home insurance policy until it expires. Consumer Reports wrote that it's important to make certain these payments are being received on time. Otherwise, they could be on the hook for even bigger payments and other trouble down the road.
The new holder of the home insurance policy should also try to keep the home in good shape. Most insurance policies require that someone is living in the home, but this may not be immediately possible. In this case, basic cleanliness of the exterior and interior of the home should be kept in check. Policyholders should check on the home at least once a week, or ask someone else to do so.
Eventually, the insurance policy will expire, and without anyone else living there, it may not be possible to take out a new policy on the home. At this point, the person inheriting the home should consider selling the property. But with enough preparation ahead of time, this entire process should be made much easier.