If you are considering securing life insurance, one of the decisions you will be faced with is making a decision on who your beneficiary will be. A beneficiary is the person you designate that will receive proceeds from the life insurance policy upon your death. How should you choose your beneficiary and what factors should you consider?
Types of Beneficiaries
When it comes to life insurance, there are generally three-types of beneficiaries; primary, secondary and final. A primary beneficiary is the “first in line” so to speak, to receive proceeds. A secondary beneficiary is next in line. Often, a secondary beneficiary will come into play if the insured and the primary beneficiary should die at the same time, in an accident, for example. A final beneficiary would come into play if the previous two beneficiaries should pass prior to the insured. This can sometime occur due to negligence.
Choosing Your Beneficiary
While anyone can serve as a beneficiary of a life insurance policy, most will choose a beneficiary based on their relationship to them. Beneficiaries are often selected based on the length of the relationship or type of relationship. Parents, for example, will often serve as beneficiaries of their children’s policies. Single adult children may have their parents as their beneficiary until becoming involved in a longer-term, meaningful relationship. Once married, spouses often serve as each other’s beneficiary. Parents may designate their children.
Changing beneficiaries on a life insurance policy is as easy as contacting your insurance agent. Changing beneficiaries is relatively simple and should be considered each time there is a major change in your relationships. Keep in mind, proceeds from a life insurance policy are generally unrestricted and may be used as the beneficiary sees fit. They are not subject to distribution under probate regulations. You should have deep trust in the person who serves as your beneficiary.
One of Several Critical Life Insurance Decisions
Choosing a beneficiary is just one of several important decisions you will make when acquiring life insurance. You should decide whether whole life or term insurance is best and the amount of insurance that will be appropriate. Our independent insurance agents can help in these decisions. Because they are independent, they are not bound in representing just the products of one company. This means they can explore multiple companies to find the life insurance solution best for you. Contact us to get started today.