You can have as many beneficiaries as you like—any percentage of the funds from your death benefit can be designated to the people you choose.
What Are Beneficiaries?
To answer this question, you need a description of a typical life insurance policy first. When you purchase life insurance, you are essentially buying a death benefit. A death benefit is a set amount of money to be distributed and used after the policyholder of the insurance plan has passed away.
This payout can be used in any way you designate prior to your death. This can include expenses such as your funeral, medical bills, estate taxes, and more.
Oftentimes, policyholders can also set aside money for loved ones. Or, they can trust a loved one to use the death benefit in the ways they established before passing away. For one or both of these purposes, policyholders choose a beneficiary.
A beneficiary, then, is someone who’s chosen by the policyholder to receive part of or all of the payout either for themselves and/or the designated expenses from the policyholder.
Why Have Beneficiaries
So why would you need a beneficiary? Better yet, why have multiple beneficiaries? An easy answer to this is, of course, you want to give money to multiple people.
Let’s say an owner of a life insurance plan, Gary has 3 grandchildren to who he wants to leave a small inheritance. Gary can take a percentage of his policy and set it aside for each of them by naming them all as beneficiaries.
Alternatively, perhaps the policyholder wants someone to be in charge of the funds and make sure they take care of all of the expenses they wanted to be covered.
Martha, an owner of a final expense life insurance policy, wants to use her death benefit to take care of whatever medical bills she is able to in order to remove the burden from her loved ones. She is not sure, however, how to do this once she has passed away.
She decides to leave it in the hands of her 4 children. By establishing her children as beneficiaries, she is able to carefully pass along this responsibility to 4 different people, all of which can hold the other accountable to make sure that her wishes are taken care of, without leaving too much work to one of them.
There are, then, many instances that having multiple beneficiaries would benefit and/or fulfill the wishes of a life insurance policyholder, these are just a few examples. In reality, you can use and designate your policy’s payout anyway and to anyone you choose—multiple beneficiaries may just be a helpful way to do it.
Get Expert Advice on Your Life Insurance
There are a lot of decisions involved in your life insurance policy. How do you find the right plan? What are your options in Houston? And, in this case, how can you decide who and how many beneficiaries you need? Having some personal, careful advice can help. With Final Expense Direct, you get that and more—call today at 1-877-674-0236.