Keep Life Insurance Statements: How Long Is Too Long?

Life insurance policies are among the important documents that you should keep forever. Other documents in this category include birth and death certificates, social security cards, wills, and living wills. While you can dispose of most monthly bills after you pay them, it is recommended that you keep insurance policies for as long as they are active.

Keep life insurance statements while the policy is active

Keeping your life insurance statements while your policy is active is essential for several reasons. Firstly, it helps you stay organised and ensures you have the necessary information to manage your policy effectively. Secondly, having these statements readily available allows you to verify transactions and payments associated with your policy. Here are some detailed instructions on keeping your life insurance statements during the active policy period:

Record Important Information:

Record key details about your life insurance policy, such as the full name of the insurance company, the date the policy was issued, the type of policy, the amount of the death benefit, and the name and address of the agent who sold you the policy. This information is crucial for policy management and filing claims.

Store Statements in Multiple Locations:

Keep your life insurance statements in at least two places to reduce the risk of loss due to fire, flood, or accidental discarding. Store one set of records in a safe place at home, such as a fireproof safe or a filing cabinet. Keep another set off-site, such as in a safe deposit box or with a trusted professional or relative. This ensures that your beneficiaries can easily access the information when needed.

Update and Review Information Regularly:

Life insurance policies can change over time, so it's important to update your records regularly. Record the date of the last update on each page to easily identify the most current version. Review your statements periodically to ensure the information remains accurate and reflects any changes to your policy.

Keep Statements with Other Financial Records:

Store your life insurance statements with other financial documents, such as income tax records, investment statements, and bank statements. This helps streamline your record-keeping and makes it easier to locate important information when needed.

Consider Digital Storage Options:

Take advantage of digital storage options to keep your life insurance statements safe and accessible. Scan paper statements and save them electronically, or opt for electronic billing and statements offered by many financial institutions. Using cloud-based storage or external hard drives can provide secure and efficient solutions for managing your life insurance statements.

Remember, keeping your life insurance statements while the policy is active is crucial for effective policy management and ensuring your beneficiaries can access the necessary information. By following these instructions, you can stay organised and informed about your life insurance policy.

Store life insurance records in at least two places

Keeping your life insurance records in at least two places is a good idea. This will make it less likely that you will lose them and more likely that your beneficiaries will find them. Here are some suggestions for storing your life insurance records in at least two places:

Keep One Set of Records in Your Home

Keep one set of records in your home, in a place where others who need this information are likely to find it. This might be with your other financial records (such as income tax, checking account, or investment records) or your other legal papers (such as a copy of your will, living will, or health care proxy). Be sure to tell the people who will need these documents where they are kept.

Keep Another Set of Records Off-Site

Keep another set of records "off-site", or outside of your home. You could use a safe deposit box or keep them with a professional or a relative who can be trusted to produce them when they are needed. If you use a safe deposit box, remember that you will be at the mercy of the financial institution as to when you can access your box.

Record the Date of the Last Update

On each page, record the date on which the information was last updated. That way, if the copy in your home differs from the off-site copy, it will be easy to tell which is the more current version.

Use Digital Storage Options

You can also take advantage of digital storage options to keep your life insurance records in two places. Many financial institutions now let you opt for electronic billing and statements, either through email or online account access. For other documents, you can use a scanner to scan them into your computer, or you can take photos using your cell phone.

If you go the digital route, it may be a good idea to create multiple backup copies in case one of them is damaged or fails. Digital backups take up much less space than having multiple paper copies of your important documents. Cloud-based storage is another option, saving space and keeping your documents secure and accessible.

Keep life insurance documents forever

Keeping life insurance documents forever is a good idea for several reasons. Firstly, it ensures that your beneficiaries can easily locate and submit a claim on your life insurance after your death. This is crucial to prevent any delays or complications in providing financial support to your loved ones when they need it most.

Additionally, life insurance policies often contain important personal information, such as your full name, address, and date of birth. Keeping these documents secure and storing them indefinitely minimises the risk of this information falling into the wrong hands. Identity theft is a serious concern, and proper document retention is a key step in safeguarding your personal details.

Moreover, retaining life insurance documents can be beneficial for tax purposes. While the IRS can generally audit tax returns for up to three years, there are exceptions where they can go back six or seven years if there are discrepancies or fraud. Having life insurance documents readily available can simplify the process of providing necessary information to the IRS if needed.

Finally, keeping life insurance documents forever allows you to maintain a comprehensive financial history. This can be helpful for personal financial planning and ensuring that you have adequate coverage as your life circumstances change. It also enables you to easily review and update your policies as necessary.

To effectively keep life insurance documents forever, consider storing them in a fireproof and waterproof home safe or a safe deposit box at a financial institution. Additionally, creating digital backups on external hard drives or cloud-based storage services adds an extra layer of security and ensures accessibility even if the physical documents are lost or damaged.

Shred documents containing personal information

Keeping your life insurance statements and other important documents secure is crucial, and there are several steps you can take to ensure your personal information doesn't fall into the wrong hands. Here are some detailed instructions on how to handle and eventually shred documents containing personal information:

Organising and Storing Life Insurance Records

First, it's essential to have copies of your life insurance records in at least two places. This safeguards against loss due to fire, flood, accidental discarding, etc., and makes it more likely that your beneficiaries will find them after your death. Keep one set of records in your home, along with your other financial records or legal papers, and inform the people who'll need them of their location. Keep another set "off-site," such as in a safe deposit box or with a trusted professional or relative. Mark each page with the date the information was last updated to easily identify the most current version.

Knowing When to Shred

For life insurance, keep the current documentation and proof of insurance as long as you're paying for and using the policies. When you receive new or updated policy information, shred the outdated documents. For tax records, follow the IRS recommendations, which vary depending on your situation. For example, the IRS can examine tax returns for up to three years after filing, but this period can increase to six years if there is unreported income over 25% of the gross income shown. In cases of fraud or failure to file a return, there may be no time limit. Keep property and investment records as long as you own the asset.

Shredding Process

When it's time to shred, use a crosscut shredder, which produces thinner strips of paper than a basic strip-cut shredder, making it harder for thieves to reconstruct the pages. Shredders are classified into 6 security levels based on the thinness of the cut. For sensitive documents, use a level of 4 or higher. After shredding, separate the strips into multiple bags to make it even harder for thieves to find matching information. Dispose of the bags on your regular trash day, minimising the time the bags are left outside. Alternatively, consider using a shredding service offered by companies like FedEx and UPS.

Other Destruction Methods

If you have a large volume of documents, you can also destroy them by burning or pulping. Before burning, check your local regulations, as it may be illegal to burn trash in residential areas. Burning documents releases harmful chemicals and contributes to air pollution, so take this into consideration. If permitted, use a fire pit or a professional burn cage. Place the documents in the fire individually, ensuring they burn completely. Check the ashes for any unburned paper and reburn if necessary.

For pulping, place the documents in a large plastic trash can and soak them in a solution of water and bleach. Bleach breaks down the paper and destroys ink colourants. After 24 hours, use an electric mixer to blend the paper into a soft, uniform mash. Spread the pulp on a plastic tarp to dry before disposal.

Remember, destroying outdated documents containing sensitive information is crucial to protecting your privacy and preventing identity theft and fraud.

Store important documents in a fireproof box

Keeping important documents in a fireproof box is a great way to ensure they are safe and secure. Here are some detailed tips and suggestions on how to go about it:

Choose the Right Fireproof Box

Fireproof boxes come in various sizes and types, from small soft-sided pouches to large, heavy-duty safes with wheels. Consider the amount and type of documents you need to store, as well as your budget. Boxes with hanging folders are great for larger documents, while pouches or small boxes are perfect for a few essential items. Some boxes also offer additional protection against water damage, which is useful if you live in an area prone to flooding.

Documents to Store

It is recommended to keep the following documents in your fireproof box:

• Birth certificates
• Passports or copies of the photo page
• Social Security cards
• Car titles
• Property deeds
• Driver's licenses (copies of the front and back)
• Credit cards (copies of the front and back)
• Insurance policies and agent contact information
• Wills and attorney contact information
• Contact information for important people and establishments
• Flash drives or external hard drives with digital documents and photos
• Other legal documents such as powers of attorney, healthcare proxies, etc.

Organising Your Documents

Consider using hanging folders or subfolders to organise your documents. You can categorise them by document type, such as medical, insurance, or financial records. Keep frequently accessed documents towards the front of the box and less-used documents towards the back.

Storing Your Fireproof Box

When deciding where to keep your fireproof box, consider both accessibility and security. It should be easy for you to access when needed, but not obvious to potential intruders. Avoid placing it on a high shelf, as fireproof boxes can be heavy, especially once filled with documents. Keep it on a lower shelf or in a closet, preferably on the main level of your home for easy evacuation in case of an emergency.

Additional Tips

• Make copies of essential documents and store them in a separate location, such as a safe deposit box or with a trusted relative.
• Consider digitising your documents and storing them electronically, either on a password-protected document on your computer or in the cloud.
• Regularly review and update the documents in your fireproof box to ensure they are current and nothing is missing.

Frequently asked questions