Beneficiary

The whole reason you get life insurance is so that those who depend on you financially will have protection after you have passed away. Hopefully by now you realize life insurance is not for you. Life insurance is a very organized process. The insurance company wants to make sure that your money gets to the right party. The person, or persons, who will receive your life insurance settlement is known as a beneficiary. You might not be too familiar with how a beneficiary works. Do not worry because we have some of the information that you need to know! Take your time and make sure the beneficiary you name is the one you want in charge.

Let’s Define Beneficiary

The beneficiary you name in your life insurance policy is the one who receives all of the death benefit. The beneficiary can be one person, or it can be two or more people. It is always encouraged that you name a beneficiary, but it is not something that you must do. The money will be paid out to your estate in the event you do not name a beneficiary. It is alright to name more than one person your beneficiary, just make sure you work out all the important percentages. You have plenty of options when choosing your beneficiary, and you also have the option of noting how much of your estate they will get. You can plan ahead as much as you would like in regards to this.

Primary vs. Contingent Beneficiaries

When you are setting up your life insurance beneficiary, you will have the options of giving two names. The first name will be the main beneficiary, also known as the primary beneficiary. They will be the first in line to receive your death benefit when you have died. The second name will be the contingent beneficiary. They will receive your death benefit if the primary beneficiary is not around. If both of these parties are missing, the money will then be paid out to your estate. It needs to be clearly defined as to who your primary beneficiary is, and who your contingent beneficiary is. Remember, you do not have to put two names down, it is just an option.

Business or Charity Beneficiary

You do not just have to choose one person to give your death benefit to. A beneficiary can also be a business or a charity. If you own a small business, you might want to name that as your beneficiary in order to help out all the workers. If there is a charity that you are fond of, feel free to name them. Just make sure you know all the rules on how much you are able to leave, and if there are any tax benefits that you can be eligible for. You can even split the money among charities, or among businesses as well. If you do not have any family left, there are other ways you can give out your death benefit and still be happy with the results.