The person who gets the life insurance payout
The person who receives financial protection from a life insurance plan is called a beneficiary. You can list multiple beneficiaries on your life insurance policy, and even list contingent beneficiaries to get the death benefit if your primary beneficiaries die and cannot accept it.
Who you should name as your beneficiary
Your policy’s beneficiary should be someone you can trust to delegate the life insurance funds appropriately. This is generally a spouse, partner, or a trusted guardian.
Listing the right person as your life insurance beneficiary ensures that they actually receive it. The life insurance death benefit can’t be paid out to certain beneficiaries, such as a minor child or a pet. Even with the best of intentions, listing them in your policy could mean that the funds are wrapped up in court proceedings for years — and that they won’t be able to utilize the life insurance proceeds when they need them most.
Similarly, listing no one as your life insurance beneficiary can pose problems. Your policy’s death benefit would then be paid out to your estate, at which time it can go through probate and be collected by any creditors you owe debts to, leaving little death benefit for your family to inherit.
Updating the policy regularly and listing valid recipients as your beneficiaries is the best way to make sure the life insurance money is paid out as you intended.
The life insurance company
Choosing your insurance provider is an important part of purchasing a policy. Each insurer approaches each candidate profile differently, so the amount of coverage you can get and how much you’ll pay will vary. For instance, some life insurance companies offer better rates to people with a history of diabetes than others.
When you’re shopping around for life insurance, there are a few key factors to consider::
- High enough coverage amounts and term lengths to suit your needs
- Riders for supplemental coverage, including a term conversion rider
- Opportunity for rate reconsideration if your health improves or you quit smoking
- Temporary coverage during the underwriting process
- Ability to decrease coverage
Other important factors to consider are the life insurance company’s financial standing and customer reviews. We’ve done all the heavy lifting for you in our life insurance reviews.
You can also learn more about the best life insurance companies here**
Knowing the ins and outs of your policy ensures that your life insurance coverage does what it’s supposed to — pays out the death benefit to the people you love and protects their financial future.