How to Choose a Life Insurance Beneficiary
Let’s start with the basics – what is a life insurance beneficiary? A life insurance beneficiary is a person that receives the monetary payout from the insurance company if you die while the policy is active. Consequently, choosing your beneficiary is a pivotal step in having a life insurance policy because the person receiving the money is likely one of the top reasons that you even want a life insurance policy to begin with. Keep in mind that it may not be possible to choose as many beneficiaries as you want or the exact person that you want. Generally, a life insurance beneficiary can be a spouse, multiple people like your children, an estate, a trust, a charity, or a legal entity like a business that you own. Some insurance companies may place a maximum on the number of beneficiaries that can be named so if you are planning to list your children be sure that they can all be listed.
Additionally, many policies allow you to also name a primary and contingent beneficiary. A contingent, or secondary beneficiary, receives the life insurance payout if the primary person passes away before you do. When deciding who to choose, it is important to consider factors like does anyone rely on you financially, would you rather have the policy go to a charity then a person, and much more. At Five Star Insurance Agency in Fords, NJ, we can walk you through all your life insurance options so that you find a policy that best supports your loved ones. Whether you have questions about who to name as a beneficiary or whether term life or whole life insurance policy is better, we are the experts to ask. Give us a call today and learn more about how we can support your insurance needs.