Life Insurance Is Important
Everyone knows the importance of life insurance. It provides a financial safety net for those that you leave behind. Your responsibility is to continue making monthly payments to ensure that your beneficiaries can receive the payout once you pass. The sum of money can vary by thousands or millions of dollars. The amount of coverage is dependent on your need.
It is critical to have the right amount of coverage. Furthermore, choosing the correct beneficiaries and adding them to your policy is equally important. It would be pointless to purchase a policy and then not designate any beneficiaries, let alone the wrong ones.
What is a beneficiary?
Before you decide who you will pick, it is best to get a basic understanding of what a beneficiary is. A life insurance beneficiary is “a person or entity that you legally designate to receive the benefits from your financial products.” With life insurance, the beneficiary will receive the death benefit that your policy will pay when you die.
There are both primary and contingent beneficiaries. A primary beneficiary is a person first in line to receive the life insurance payout from your life insurance policy. This person is usually a spouse, child, or other family member. A contingent beneficiary only comes into play should your primary beneficiary die before you or at the same time as you. They would receive the death benefit should all primary beneficiaries be deceased.
Choosing Your Beneficiaries
If you are ready to start picking (or adjusting) your life insurance beneficiaries, you might want to think about the following ideas. The Money Geek has created a comprehensive checklist for consideration when choosing the proper life insurance beneficiary.
List the people that matter the most.
This one is self-explanatory. Think about who you value the most and create a list.
Think about how your death would affect each person financially.
This action may be hard to undertake but reflecting on how your loved ones and business will financially cope when you pass away is vital. Would they make it without your financial support?
Consider who would benefit the most.
Think about how the money would affect an individual’s life. Will your business partner be able to keep the doors open? Is your spouse going to be able to quit their job and raise the kids?
Consider how it would affect those not chosen.
Unfortunately, you cannot choose everyone as a beneficiary. There will be people left behind, and you must consider how that will impact them and also affect those you did choose.
Ask before naming someone as your beneficiary.
When you have shortened your list of possible beneficiaries, have a conversation with each person and gauge their feelings about being a beneficiary. This task is especially significant if they will be responsible for your children, pets, or business.
Life insurance is a must, and choosing a beneficiary comes with the territory. Take the time to make the best decision for yourself and your family.
Life Insurance Questions?
We hope that this information on choosing life insurance beneficiaries is useful to you.
If you’d like to learn how we can help you plan your retirement, call Empower Brokerage at (888) 539-1633 to speak to one of our Life and Annuity experts or leave a comment down below.
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