Beneficiaries

Whenever you name someone as the beneficiary of a life insurance policy, it is important to think the process through. Here are some factors that may impact who you name as beneficiaries on the various policies that you carry.

First, what is the intent behind the policy? Are you thinking in terms of covering your final expenses? Then your life insurance beneficiary should be the executor of your estate. This will ensure that the person who is charged with settling those final expenses receives the beneficiary life insurance policy payment directly and can carry out your last wishes.

In situations where you wish to leave a lump sum to one person as a token of your esteem, then you can choose your life insurance beneficiaries based on your desire to make life easier for a loved one. Keep in mind if the plan is to name beneficiaries that are underage when you pass away, the funds may be held until they are of age, or they may be held in trust by a parent or legal guardian. Keep that in mind when you speak with your insurance provider about naming a beneficiary of a life insurance policy. Careful planning can ensure the money gets where you want it to go.

You may wish to consider attaching a list of life insurance beneficiaries to your coverage. This creates a situation where if the principle beneficiary predeceases you, the funds can be released to the next person in line. Not all insurance providers offer this option, so be sure to ask before you activate the policy.

There are a number of ways to handle life insurance beneficiaries designations. Often, local laws will come into play. It is a good idea to know what could happen in a number of situations. What would occur if you named a minor as a beneficiary? How would your insurance company locate beneficiaries of unclaimed life insurance policies? Is there a life insurance beneficiary tax that will have to be paid upon release of the funds? Many insurance companies cover this sort of detail on their forms, while others include it in the text of the policy itself. For example, State Farm Life insurance beneficiary forms are very detailed and will answer a lot of questions for you. For any concerns you do not see addressed, check with your life insurance agent. He or she will be able to help you plan the beneficiaries so that your wishes are honored.