If you have a life insurance policy, your beneficiary is the person who will receive the benefits in the event of your death. For obvious reasons, choosing a beneficiary is an important step in the process of getting life insurance. If you are new to the process, the following tips may help you.
Think about the purpose of the insurance
You buy life insurance for a reason. It could be supporting your family if you die. In that case, the most likely recipient is your spouse. You may have poured your heart and soul into a business and want it to continue when you are away, in which case your business partner may be the best beneficiary. The right person to be named as your life insurance recipient depends on your purpose of purchasing the insurance.
Look at all your options
You are not limited to your spouse or children as beneficiaries of your life insurance. You can name a friend, a significant other, a godchild, a charity, a trust, your property or more than one person to share the benefits when you decide. But if you are married and live in a community real estate country, your spouse must waive his or her rights before you can appoint another life insurance recipient. This is because the nine state-owned real estate states require an equal distribution of assets acquired during a marriage. Our experienced agent will be happy to advise you on your options.
Choose a secondary recipient
You buy life insurance to benefit someone else if something happens to you. But something can happen to your receiver as well. For example, husbands and wives sometimes die in the same accident. You mention one or more main beneficiaries of your life insurance.
This person or persons will receive death benefits when the insurance company pays out. You should also name one or more secondary beneficiaries if the primary beneficiaries are deceased, cannot be located or for some reason refuse the insurance income. Naming secondary beneficiaries gives you a backup plan and greater control over where your death benefits go.
Do not appoint a minor as a beneficiary
Legally, children cannot receive life insurance income directly. If you appointed a minor child as a beneficiary in your life insurance policy, in the event of your death, the court would appoint a guardian to decide how the death benefits would be handled and spent. This may not be in line with your wishes. A much better option is to create trust in your child, name the trust as the beneficiary and choose someone you can trust to act as a trustee and manage the funds for your child.
Keep Beneficiaries Updated [1
9659003] If you are getting married or divorced, or if your child reaches adulthood, you may want to change the beneficiaries in your life insurance policy. Most people do not want their life insurance income to go to an ex-spouse due to surveillance.