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Life Insurance Beneficiaries
Buying life insurance requires a certain amount of research before you even begin comparing life insurance quotes and part of that research is learning the terminology of life insurance policies. One term that might not be completely clear is “beneficiary.” At it’s most basic level the beneficiary of your life insurance policy is the person, persons or entity receiving the death benefit payment in the event of your death.
Who, or what, can be named a beneficiary of a life insurance policy?
Typically your named beneficiary will be a close relative such as a spouse or a child, but you have a number of options when naming a beneficiary for your life insurance policy. Your five basic options include: one person, two or more people, your estate, the Trustee of a trust you have created or a charity.
When choosing a beneficiary you should be prepared to name a “primary,” or main, beneficiary and a “contingent,” or secondary beneficiary to receive the death benefit if the primary beneficiary can’t be located for payment. It’s a good idea to keep up with the beneficiaries named on your life insurance policy and make changes to reflect changes in your life, such as a divorce or new children in the household.
Once you’ve done your research, understand the terminology and choose your beneficiary, or beneficiaries, it’s time to start a life insurance comparison. Remember life insurance comes in two distinct types – term and permanent. And to add even more choices to the mix, both types of life insurance can be purchased in a number of configurations. The reason for all these options is life insurance is not one-size-fits-all and when comparing life insurance you want to make certain you are comparing apples-to-apples. One other element to keep in mind is life insurance can be a major part of your financial planning with many life insurance policies offering more than simple death benefits.
Did You Know? The death benefit of a life insurance with no named beneficiary goes to the estate of the deceased.
Takeaways:
- The beneficiary of your life insurance policy is paid the death benefit.
- You should name both a primary and contingent beneficiary for your life insurance policy.
- Keep up with your named beneficiaries and make changes to reflect changes in your household and life.
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