Naming Beneficiary of a Life Insurance Policy
Naming the beneficiary of a life insurance policy is an important decision that requires careful thought. The beneficiary of a life insurance policy receives the death benefit proceeds of the insurance policy in the event you die. It’s important to take your time in choosing your beneficiary. But, remember that you may be able to change the beneficiary in the future if you choose.
Get a Free Quote for Life Insurance
Guide to Naming a Beneficiary of a Life Insurance Policy
- Defines what a life insurance beneficiary is.
- Explains things to consider when naming your beneficiary.
Your Life Insurance Beneficiary
Your beneficiary receives the proceeds of your life insurance policy upon your death. The beneficiary you name may be a person, your estate or a business or organization.
When you select a beneficiary, you should provide the complete name of the person and state clearly the amount or percentage of the proceeds the person is to receive from your life insurance policy.
Some states do have restrictions as to who may be named your beneficiary on a life insurance policy. There are states that require you leave the proceeds to a relative if you are choosing an individual. Also, if you a choosing a minor as beneficiary, a guardian must be assigned to oversee/supervise the proceeds of the life insurance policy, and the spending of those proceeds until the minor named beneficiary reaches the age of adulthood.
Choosing to Name Multiple Beneficiaries
Identify multiple beneficiaries by name. You can name as many beneficiaries as you want to your policy.
It may be easier for you to states a specific percentage of the life insurance proceeds to be designated to each of the multiple beneficiaries.
Changing Your Life Insurance Beneficiary
You’ll want to remember to update your beneficiaries when life events occur. Some events including marriage, birth of a child and divorce may alert you to the need to update the beneficiaries on your life insurance policy.
Changing or adding a beneficiary may be as easy as requesting a beneficiary change form from your insurer, completing the request form and mailing it back to the insurer. The instructions for a beneficiary change should be stated in your policy.
There are two types of beneficiaries – Revocable and Irrevocable.
A "Revocable Beneficiary" is one that can be changed at any time in the future. Usually, you fill out a beneficiary change request form and send it to the insurance company. The insurance company will make the change to your policy.
An "Irrevocable Beneficiary" is a beneficiary that cannot be changed, unless the beneficiary agrees to the change. You must have the consent of the beneficiary to make the change. The irrevocable beneficiary may refuse to sign the consent form to be removed from the policy. In that case, there is nothing you can do.
How to Handle Contingent Beneficiaries
You may also name contingent beneficiaries to your life insurance policy. Any contingent beneficiaries only become beneficiaries if the primary beneficiaries die before the insured’s death benefit is paid out. If the insured and the primary beneficiary have died before the death benefit was paid out, the contingent beneficiary receives the life insurance proceeds.
It’s important to understand – If the insured passes away, and the primary beneficiary dies, and there is no contingent beneficiary – The proceeds of the life insurance policy pass on to your estate, and may be subject to additional taxes and fees that otherwise would not been taken from the proceeds. By adding a contingent beneficiary to your policy you can avoid this situation.
If you are just starting to learn about term life insurance, please read the article on how term life insurance works.
Here's how you can review the top ten life insurance companies and request your free life insurance quotes online.
Life Insurance Quotes
Top Pick – JRC Insurance Group
JRC Insurance Group helps you shop, compare and save on life insurance. Regardless of your age or health background, we'll shop our 40+ insurance companies and find you affordable life insurance you need to protect your family and fit your budget. Compare the best life insurance rates for savings up to 73%. Get Your FREE Quote.
Highly Recommended – Haven Life
- Get up to $1,000,000 of affordable term life insurance today
- Apply online in under 20 minutes, start coverage today
- Backed by MassMutual, rated A++ by AM Best
Haven Life uses the information provided in your application to make an instant decision on your application. Healthy, qualified applicants (based on the information provided in your life insurance application) can be insured immediately with no medical exam while other applicants can receive immediate coverage pending a medical exam.
Highly Recommended – Globe Life Insurance
$1* Buys $100,000 Globe Life Insurance
- Coverage for Adults or Children
- No Medical Exam. Just a Few Y/N Health Questions
- Free Information. No Phone Required. No Waiting
Buy Direct. Monthly Rates as low as $3.49 for Adults/$2.17 for Children.
Copyright 2017. All Rights Reserved.