After securing your life insurance policy, your next vital decision is selecting your beneficiary. This person will receive your policy benefits and help carry out your final wishes, making it one of the most important choices in protecting your family’s future.
What’s a beneficiary?
A beneficiary is a person designated to receive your insurance proceeds after you pass away. You can name an individual to receive the benefits directly or choose someone to manage the funds if they’re meant for children or an organization.
We do not recommend selecting a minor as your beneficiary. Here’s why and what else you should consider:
Primary vs. Secondary (Contingent) Beneficiaries:
It’s wise to name both a primary and a secondary beneficiary. If your primary beneficiary passes away before you or is unable to receive the benefit, the secondary beneficiary will receive the payout instead.
However, you can name multiple primary beneficiaries and specify how you want the benefit divided among them. For example, if you want to leave the benefit to your three children, you can split the benefit equally (33.33% each) or designate different percentages based on your preferences (such as 40%, 30%, 30%). Work with your agent to clearly document how you want your policy benefits distributed.
Common Beneficiary Choices in Final Expense Coverage:
- Spouse: This is often the most common choice, especially if you share financial responsibilities.
- Adult Children: Your adult children can receive the benefit directly and manage it independently.
- Trust: In case you leave the benefit to a minor, a legal representative will manage the benefit until the child turns 18.
Special Considerations:
- Keep your beneficiaries updated, especially after major life events like marriage, divorce, or births.
- Be specific when naming beneficiaries – include full names and identifying information.
- Review your choices periodically to ensure they still align with your wishes
Help your loved ones by telling them about your policy now. Show them where you keep important insurance documents and explain how to file a claim. This advance planning makes things easier for them during their time of grief.
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