If you’ve gone over the paperwork for your life insurance policy, you may have been scratching your head on who to list as a beneficiary. The person you list as your beneficiary can have a major impact on your benefits and who receives them. Here are some important topics to consider when you are choosing your beneficiary for your life insurance policy.
Why is This Important?
Who you select as beneficiary of your policy can have a huge impact on your family and who receives your benefits. In the past, some people were completely left out of the loop or were not responsible enough to handle such a large task. This caused a lot of problems and in some instances has had to be handled by the courts.
When selecting a beneficiary, it is likely your spouse or children would be chosen to receive the benefits. A parent or close relative may also be selected. If you own a business, then your business partner can use the funds to help continue the company’s operations.
Factors to Consider
If you have a clear choice for your beneficiary, there are factors you need to stop and think about first, such as:
Financial dependence – There must be legitimate insurable interest between you and your beneficiary. This means your beneficiary depends on you for financial support and would continue to need it following your death.
- A person’s age – In some states, a beneficiary can not be under the age of 18. In this case, it is recommended to establish a trust with a named trustee. The trustee will handle the trust until the minor reaches a specified age.
- Name a contingency – In the event your selected beneficiary passes before you, it’s recommended to list a second beneficiary. The benefits will be given directly to your contingency without probate.
- Check Your State’s Laws – Your state may have restrictions on who can be named a beneficiary. Speak with a lawyer if you need more guidance on selecting a beneficiary.
- Other options for beneficiary – If you do not have a spouse, children or a specific individual in mind for a beneficiary, you do have other options. The benefits can go into a trust, donated to charity or local nonprofit or they can simply go into your estate.
It is also important to keep your beneficiaries up-to-date and to be specific about who you choose. If your marital status changes, be sure to update that information with if they should receive the benefits. If you have multiple children, list how the benefits will be divided and among who.
Make the right decision when it comes to choosing the beneficiary of your life insurance policy. You want your loved ones to have a secure financial future and not one full of stress. If you need more assistance planning your life insurance policy needs, please speak with us today at Care Financial. Care Financial is a privately owned and operated business providing families, individuals and businesses with comprehensive wealth management strategies. Contact us online at www.carefinancialonline.com or call us at 251-633-7122.