For people who are married or in a long-term relationship, it is normally a very obvious choice about who to name as the person receiving the benfits of a  life insurance policy. In most cases it will be the spouse or partner who is going to be most in need of the protection and financial assurance offered in the event that they should be left to cope with the impact of your demise.

There are some cases where things are not so straight forward and  it isn’t that easy. So how do you determine who you should pick if you aren’t married, if you are divorced, or if you are remarried with children from both marriages?

Who Can You List as a Beneficiary?

When you designate a beneficiary, you have several options available to you. They include each of the following:

  • An extended family member
  • Someone in your immediate family
  • A friend
  • A charity
  • Your estate
  • A trust that has already been set up with a trustee (who administers the proceeds of the policy)

What Happens if You Don’t Choose a Beneficiary

In most cases, your insurer takes care of all of the finer points regarding your policy, even to the point of making sure that you select a beneficiary. What happens if you obtain a policy, putting off that designation for a few days that turn into a few weeks and then into a few months or years? What happens if the individual who you name as your beneficiary dies before you do?

In these cases, the rules and guidelines provided by your state regarding this matter, determine who will be named as your beneficiary. As a result, the individual selected in this manner receives the benefits due to be paid out.

 How to Decide Who to List

While the decision is financial in nature, it is also a personal one. Selecting your beneficiary is a task that might take several different factors into consideration. For example, you might want to consider each of the following:

  • Are the proceeds from your policy needed to pay for the funeral?
  • Who is going to handle the funeral arrangements?
  • Are you leaving a spouse behind who doesn’t have employment?
  • Is your spouse going to need the money to provide for your children?
  • Who counts on you now for your financial support?

Why Should You Select a Secondary Beneficiary?

Your primary beneficiary is the individual who you choose to receive the proceeds that are due to be paid out. If this individual dies prior to your death, then you need to select a new beneficiary unless you already have a secondary one selected. It saves you time and trouble to simply list both your primary and secondary beneficiaries at the same time. For example, if you are married, you might want to list your spouse as the primary beneficiary and your children as the secondary.

One situation that you are best trying to avoid is that the people you leave behind end up in some sort of dispute about who is going to receive the payout from a policy that you take out. Unthinkable as it may seem, in reality this can and indeed does happen often. Some families have been literally torn apart when the recipient of any death beenfits has not been clarified.


Making Sure Your Family is Protected


Can You Change Your Beneficiaries?

If your personal circumstances alter it is worth revisiting your policy because you can normally change your beneficiaries at any time. If you marry, have children, or become divorced, you might want to make a change in the status of the current beneficiary. Just contact your insurer to make the necessary modifications to your life insurance policy.

Last Thoughts

Giving some thought to these matters is not easy. To contemplate your own death and further to that, try and make sure that your family does not suffer financially as a result is a very selfless act. It is easy to categorise this as one of those things that can be put off for a few years but the simple fact is that the earlier in life that these policies are taken out, the greater the benefits that are likely to be attached.



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