Choosing a beneficiary for your life insurance policy or will requires careful planning and insight, and there are some boxes to check before deciding on one.
What Is a Beneficiary? Why Do You Need One?
Beneficiaries are the person or people with whom you entrust your funds and possessions once you’ve passed away. Generally, they’re the ones who get your stuff when you’re gone.
The reasons why you need beneficiaries should be pretty obvious. It’s safe to assume that you’d rather your belongings go to someone you love and trust rather than be probated and sent to court.
Not only that, but you can ensure that your loved ones know exactly how your assets are to be distributed—this way, your wishes are honored, and your beneficiaries have no questions on how to handle your possessions.
What Are Your Options?
You can specifically choose one or more of these individuals or organizations to be your beneficiary:
- One person (not just family members)
- Multiple people (benefits must be split amongst them)
- A charity or nonprofit
- A minor (a child under 18, typically either your children, grandchildren, nieces or nephews, etc.)
- Your estate
- The trustee of a trust you’ve established
- A legal entity (if you own a company, for example)
Keep in mind that you should choose both a primary and contingent beneficiary. The contingent is essentially the “understudy” of the primary—if something were to happen to your primary beneficiary, their share would be passed along to the contingent beneficiary.
Your Choices Are In Front of You: Now What?
Now that you’re familiar with the terms of the beneficiary, you must consider what you and your family personally need. Firstly, understand that all of your monetary assets—from your home to life insurance and 401k—must be considered and distributed.
Once you know how much you have to give, determine who would be in the greatest need once you are gone. If you have dependents in your immediate household, you can set aside funds for their daily expenses to substitute your income. And, if you’re choosing someone under 18, make sure to select a trustee until they are old enough to receive it themselves.
Establish certain conditions when the beneficiaries can access the funds—many people, for example, will withhold the payout until the beneficiary reaches a certain age, graduates college, etc. Overall, be sure that your will and/or life insurance policy’s conditions are to your standards and the needs of your loved ones.
Invest in Insurance You and Your Beneficiaries Can Trust
One of the best ways to leave something behind for your beneficiaries is with a life insurance plan—but finding a life insurance plan worth investing in for the sake of your loved ones can feel impossible.
Let a trusted BBB accredited, A+ rated company do the work for you. Senior Life Services works tirelessly to provide our customers with the best life insurance for their needs and budget. If you want a free, quick, and easy quote from one of our licensed agents, give us a call at (800) 548-3249.