How to Choose Your Beneficiary
There are many important decisions that life insurance shoppers must make, but none is more important than choosing the right beneficiaries. It is after all those beneficiaries who will receive the proceeds from any life insurance policy you select, and protecting them is the whole purpose of life insurance coverage.
Choosing the right beneficiary or beneficiaries is not always as easy as it sounds, and it is important to give this decision the care and consideration it deserves. In many cases a husband and wife will name one another as beneficiary, but what happens if both spouses were to die in an automobile accident? Who would get the money then, and who would take care of any children the couple may have? These are important decisions – too important to be left to chance.
For that reason it is important for couples with children to have a solid will as well as a significant amount of life insurance coverage. The will should spell out in great detail the couple’s wishes for their minor children, as well as how the proceeds of the life insurance policy are to be distributed should both partners die at the same time.
Of course those contingent beneficiaries should be spelled out in the life insurance policy as well. A contingent beneficiary will receive the proceeds from the life insurance policy in the event the main beneficiary dies before the insured. Naming a contingent beneficiary is the best way to protect your family members and make the most of your life insurance coverage.
Of course choosing a contingent beneficiary can be just as much of a challenge as choosing a primary beneficiary. There are a number of factors to consider when making this decision, including your relationship with the potential beneficiaries and of course their ability to handle the money wisely. Some people may have a close relationship with a certain family member, all the while being unsure of that person’s ability to handle the proceeds of the policy. If that is a concern it may be a good idea to name another, more fiscally prudent, person as beneficiary, or to name each individual as partial beneficiaries. There are many possible arrangements, but it is critical that the insured be comfortable with the final decision.
It is also important for the insured person to communicate with the beneficiaries who are named in the life insurance policy. It is important that each person who is named as a beneficiary on the policy know where the original policy is located, or at least how to get hold of a copy of that policy. . Neglecting this important step could leave those who stand to benefit from the policy unable to collect their money. Tracking down a life insurance policy following the death of a loved one can be a difficult and time consuming process. It is much better for all involved to know where the paperwork is located and how it can be accessed.
Providing a trusted friend with the logon ids and passwords of any online accounts is also an important consideration. These days a great deal of insurance work is done online, and letting your beneficiaries know how to access this online information can really streamline the process. Some people do this by printing out a master list of account numbers, user ids and passwords, and keeping that information in a safe deposit box or other secure location. This can make it easier for your beneficiaries to get the money they have coming to them in a timely manner.