How to Choose the Beneficiary on Your Life Insurance Policy

​When you have a life insurance plan, the beneficiary comes into the picture to receive the benefit or payout on your policy in the event of unfavorable circumstances — when you die. If you’re not sure who you can name as a beneficiary on your life insurance policy, this article will guide you in dealing with the decision process.

Beneficiaries on Your Life Insurance Plan
The main reason why you would buy life insurance is to give support to loved ones left behind, and every life insurance plan necessitates you to name a recipient. A policy’s primary receiver is the first person who will obtain the benefits of your life insurance premium when you die. You’re not limited to just one beneficiary. In fact, you can name more than one, and you can designate the percentage of the payout you want to go to each one. For example, fifty percent to your partner and the rest to your adult child.

Aside from the primary beneficiary, the insurer will ask you to pick the secondary beneficiary. The “contingent beneficiary” is the person who will obtain the payout if the primary beneficiary dies. 

Legal Viewpoint for a Minor as a Beneficiary
God forbid, when you and spouse die at the same time, it would be a very challenging and painful experience to those who were left behind, especially the children. There’s a legal stand for a minor as a beneficiary.  The law inhibits life insurance payout to anyone who has not reached the age of maturity — 18 to 21 years old. If both parents died with surviving minor children, the decision linked to life insurance payout would be turned over to probate court. The court will decide who will oversee the money or estate until the child becomes eligible for compensation.

For peace of mind, here are two possible options you can take:

• Name an adult custodian you can trust to manage the financial budget for housing, education, and health care while your child is a minor. The remaining money will be handed over to your child upon reaching the age of majority which he can use to spend in any way he wants.
• Consult a lawyer to set up a trust. The trust is the primary recipient, and the trustee (representative) manages and allocates the funds. Good to know: This approach is more controllable than naming an adult custodian.

What If You Die and You Have No Child?
If you have no children to receive the life insurance compensation, you choose the person who is dearest and nearest to your heart. He can be a relative. But, if you have no more relative to receive the payout, you can consider naming a charitable organization as the recipient of your life insurance benefits.

One More Thing Before You Go
One of the essential steps you can take in life is providing the best future for your family. Talk to a professional insurance agent to get the basic life insurance policy now for utmost convenience.

At Berlin & Denys Insurance, we aim to provide comprehensive insurance policies that make your life easier. We want to help you get the insurance that fits your needs. You can get more information about our products and services by calling our agency at (800) 946-3303. Get your free quote today by CLICKING HERE.