A life insurance beneficiary is the person that will receive the death benefit of a life insurance policy. The most common person that is a life insurance policy’s beneficiary is a spouse. If I have a life insurance person, I would name my wife as the beneficiary to the policy, therefore, if I pass away, she would receive the money.
Most of the time, there is just one life insurance beneficiary, but you can name any of the following as beneficiary:
- Two or more people (say your three kids)
- A trust you have set up
- Church or non-profit charity
- Your estate
There is a primary beneficiary as well as a secondary. If you were to pass away at the same time as your primary beneficiary, the death benefit will then be paid to your secondary beneficiary. If no beneficiaries are alive, then the death benefit will be paid to your estate and will then go through probate.
What else do you need for your life policy?
Absolutely everyone should have a will! You can even write your own will that is valid. There is nothing worse than family members arguing over your assets after you pass away.
Before it is too late, be sure to fully explain your financial situation and what is to happen after you pass to your children/other family. Also, be sure to sit down with a certified financial planner and plan out your financial situation even after you pass. Having a plan is much easier in every situation.
From time to time I have had clients that needed to change their beneficiaries on their life insurance policies. This can be because of a divorce, birth of a new child/family member, or getting re-married. Be sure the person you have the life policy for is the primary beneficiary. Even though it sounds obvious, be sure to input the chosen beneficiary’s information, such as their social security number, correctly. There can be confusion or other issues if the life insurance beneficiary is not stated clearly on the policy.
For more information on life insurance, check out my other site, here.