When you purchase a life insurance policy, you must name a beneficiary. The policyholder’s beneficiary will receive the death benefit payment if you die while the insurance is in force. Choosing a beneficiary may seem simple, but it’s essential to take some time to weigh your options.
Who Can Be a Beneficiary?
You can name just about anyone as your life insurance beneficiary. This can include your spouse, child, parents, siblings, or other relatives. You can also name a non-family member, such as a close friend or business partner. You must update your beneficiaries to reflect your marital status if divorced.
What Happens if I Don’t Name a Beneficiary?
The death benefit is paid to your estate if you do not designate a beneficiary. This can complicate things for your loved ones, as they must go through probate to receive the money. Probate is a lengthy and expensive legal process, so it’s best to avoid it if possible.
Your Senn Insurance Agency agent can explain how to name beneficiaries and the best way to structure your life insurance policy.
What Are The Different Beneficiary Types?
Three common types of beneficiaries are primary, contingent, and tertiary. The primary beneficiary is the first person (or people) who will receive the death benefit. The money will go to the contingent beneficiary if they die before you do.
The contingent beneficiary is the second person (or people) in line to receive the death benefit. The money will go to the tertiary beneficiary if they die before you do. The tertiary beneficiary is the third person (or people) in line to receive the death benefit.
Contact Senn Insurance Agency to help you choose the best life insurance policy for your needs in O’Fallon, MO. Our agents can help you understand the different beneficiaries and how to name them on your policy. We’re here to help you every step of the way.