Choosing a Life Insurance Beneficiary: What You Need to Know
Choosing a Life Insurance Beneficiary: What You Need to Know
Mutual of Omaha
Choosing one or more beneficiaries is an important step in purchasing a life insurance policy. After all, your beneficiary is probably the reason you have life insurance in the first place.
“Often, the reason to buy life insurance is if you have people that are dependent on your income stream,” explains Sheryl L. Rowling, CPA/PFS and head of Rebalancing Solutions at Morningstar. Other key reasons are to cover your final expenses or leave a gift to a charity or other organization.
If you are thinking about purchasing a life insurance policy, here are some things to think about when choosing your beneficiary.
What is a life insurance beneficiary?
Your life insurance beneficiary is the person or organization that receives the death benefit from your policy.
Almost anyone can be a life insurance beneficiary. Some typical examples of life insurance beneficiaries include:
A person, such as your spouse or a relative
Multiple people, including your children
A trust
Your estate
A charitable organization
A legal entity, like your company
You may have more than one beneficiary, allocated either by dollar amount or percentage of the policy benefit; you may even have contingent beneficiaries, to whom the benefit proceeds cascade in the event that your primary beneficiary dies before you.
Remember that It’s okay to change your mind. As long as you’re still living, you can always change your beneficiary. As your personal life changes, as your family grows, and as your needs evolve, you can change your beneficiary at any time.
Questions to consider
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