So, you’ve bought, or are thinking about buying a Life Insurance policy. Smart. Not only is it a great way to help take care of your final expenses, but it can also help to take care of the people you love after you pass. Now the question is, who do you choose as your beneficiary?
A Life Insurance beneficiary is the individual or entity you choose to leave your death benefit to. It is entirely up to you as to whom you would like to name in your policy. These are your options:
- An individual
- A group of people (two or more persons)
- The trustee of a trust you have set up
- A charity
- Your estate
If you do not choose a beneficiary, the benefit will be paid to your estate.
While there are no rules as to who you can leave your benefit to, there are a few things you should know before naming someone:
1. You can name a minor as your beneficiary. But be warned, a Life Insurance benefit cannot be directly paid to a minor. Instead, you should create a trust in the minor’s name or make a legal arrangement appointing an adult or guardian to manage the money.
2. Be aware of shared property states. Shared property states require your spouse to sign over their right to the death benefit should you decide to leave the money to someone other than your spouse. The following states are shared property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
3. Do not name only a primary beneficiary. While most people just name their spouse as the primary beneficiary, they neglect to acknowledge that their spouse may predecease them. In that case, you should always name a back up.
Want to know more about Life Insurance policies? Contact Texan Insurance
Photo - © Valerie Potapova - Fotolia.com
Source – What is a beneficiary?