5 Things to Consider When Choosing a Beneficiary

1.Who should be your beneficiary

There are two levels of beneficiaries: a primary beneficiary is the first person who will receive your life insurance payout. A contingent beneficiary is the backup, in case the primary beneficiary is unable to receive the money. You can name more than one beneficiary and decide how much each one gets. 

The Insurance Information Institute (iii.org) suggests you should make the identity of your beneficiaries very clear including full names and social security numbers. This will make it easier for the life insurance company to locate them and minimize any disputes that could arise regarding benefit distribution. 

2. Your life situation

Your beneficiary should be someone who depends on you financially. For example, let’s say Jasmine and Sean just got married. Sean adds Jasmine as his primary beneficiary so she will be financially protected if something happens to him. Jasmine does the same. She names Sean as her beneficiary on her life insurance policy.  

A few years later, they have children. Now, they want to make their kids contingent beneficiaries on their policies. That way, if Sean or Jasmine are unable to receive the money, their children will be taken care of. Life changes, so your policy should too. 

3.Who should become beneficiary besides spouse and kids

Though people typically name their spouse, children, parents or other family members, you can also choose: 

• A close friend 

• Two or more people 

• Trustee of a trust you set up 

• Charity 

• Legal guardian for your minor children 

If you name a minor child, the money may need to go into a trust or be managed by a guardian until they are old enough to receive it. 

4. Regular review of your policy

Life changes—marriage, divorce, new children, or the loss of a loved one can mean your policy needs an update. If Jasmine and Sean had another child or if Sean passed away, Jasmine would need to update her beneficiaries to make sure her kids were still protected. 

5. Consulting a life insurance expert

Choosing a beneficiary is an important decision, but you don’t have to do it alone. Let a Kemper Life Insurance agent come to your home to answer questions and advise you on the best choices for you, your family and budget because peace of mind has its benefits.  

Source: https://www.iii.org/article/what-beneficiary