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How to choose a life insurance policyholder



Life insurance is important to protect your family's financial future. Who you list as the beneficiary can be as important as your first decision to buy life insurance. It's a big job, that's why it's important to choose the right person – someone who is reliable and knows what matters most to you.

Your local ERIE agent is here to help you determine the right recipient (or beneficiary) for your unique situation. For general answers to frequently asked questions, continue reading.

What is a beneficiary?

A beneficiary is a person or entity designated to receive the money from your life insurance policy in the event of your death. A beneficiary can be a person, company, trust, charity, church or even a school. And an insurance policy can also have more than one beneficiary.

When choosing a beneficiary, an insurer should choose someone with an "insurable interest" in the life of the insured. Insurable interest generally means that the beneficiary will suffer some form of loss if the life insured disappears. Those with an insurable interest often include, but are not limited to:

  • Spouses, household partners, fiancées or joint spouses
  • Divorced spouses (if there is a financial dependency, eg children or a property settlement specified in a divorce decree )
  • Parents
  • Guardians with permanent custody
  • Grandparents
  • Children
  • Siblings
  • Business partners (Read more about key person's life insurance and continuation of the company)

Why do I need a beneficiary?

Naming a beneficiary lets your insurance company know who will receive the police benefit when you pass. At Erie Family Life, we require our policyholders to mention a beneficiary when purchasing life insurance.

If a beneficiary is not named, your family may need to go to trial before receiving any insurance funds. This process delays compensation while exposing your loved ones to a complicated and costly legal process while grieving.

How to choose a beneficiary


Choosing a beneficiary depends largely on how you want your life insurance to be used at your death. If you have young children, it can be a way to get your children's care in your absence by naming a spouse or close family member that you trust as your beneficiary and remembering your wishes. Adult children can use the insurance benefit to pay for college. And if you choose a charity, the funds will go to something that is close to your heart.

In short, who you choose as a beneficiary depends on your values ​​and lifestyle. Here are some answers to common questions about beneficiaries that will help you make your decision:

  • What happens if my beneficiary dies ?
    If you survive your beneficiary, you should always call your insurance agent to update your policy. And preferably you should always name a primary and contingent or secondary, recipient. Naming a conditional beneficiary makes it clear who will receive your insurance benefit if a primary beneficiary is deceased.
  • What happens if my beneficiary is a minor ?
    If you name a minor as a beneficiary, you should also name a guardian ̵
    1; someone who can manage the insurance funds until they turn 18 years old. If you do not want to name a guardian, you can always name your property or your living trust as the beneficiary and include instructions on how the insurance money should be used. However, when it comes to property planning and wills, you should consult a legal and / or tax professional.
  • What if I have no children?
    Your life insurance policyholder should be a person or entity that you are comfortable naming as the recipient of your life insurance policy continues. If your beneficiary is a person, that person should have an insurable interest in your life. An important part of choosing a beneficiary is to make sure that the funds are used in a way that meets your wishes.
  • What if I want to donate money to a charity, school or church?
    Your local ERIE agent can help you determine a way to fulfill your charity desires while ensuring that your family is protected. If you decide to name a charity as a beneficiary, it is recommended that the amount matches an established pattern of giving or supporting.
  • Can you choose a pet as a beneficiary ?
    This is not as far-fetched as it may sound. Some people have left small fortunes to their pets. Most insurance companies, including ERIE, do not allow you to name a pet as a beneficiary. If you are worried about protecting your hairy friends, name a trustee who will take care of them after you are gone.

What do I do when I have chosen a beneficiary?

Once you have found the right fit, you can inform your recipient of their new role. To put them in the best possible position:

  • Discuss your policy . Nobody likes to talk about death. But it is important to have a conversation with your recipient. You may want to discuss who your insurance company is and where they can find your insurance policies as you pass. You can give your recipient information about why you chose them and what your final wishes are. Be prepared if they suggest an alternative or need more information.
  • Update Your Information . When your funds are distributed, errors in policy documents can slow down the payment process. List your recipient with updated contact information including an address, phone number and his or her relationship with you. This also applies to organizations.
  • Review your policy frequently . As your priorities change, your policies will change. Review your policy at least once a year and after important events such as the birth of a child, the death of a beneficiary, marriage or divorce. Update your beneficiaries as needed and make sure your funds are in the right hands based on your current situation.

Protecting Those You Love

Your life insurance policy should reflect what you value most. Choosing the right beneficiary is as personal as choosing the right coverage. That's why we're here to help you both.

At ERIE, we know that life is not a scenario that suits everyone. Each family dynamic is unique and we are here to provide you with specialized guidance in protecting the people who are most important to you. Ask us how we can protect your heritage. Find a local agent to learn more about life insurance * from Erie Family Life.

* ERIE® life products and services, provided by the Erie Family Life Insurance Company, based in Erie, Pa., A member of the Erie Insurance Group, are not available in New York.


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