If you have a life insurance or final expense policy, you will need to choose a beneficiary to receive your death benefits after you pass away. You can choose whoever you like to be your beneficiary, and you can even set death benefits to be distributed in a certain manner. This is what you need to consider when choosing a beneficiary for your final expense insurance policy.
Before Choosing Your Beneficiary
You shouldn’t choose your beneficiary without understanding the purpose of your insurance policy. If you want to provide for your family, you will likely benefit most from choosing a relative to be your beneficiary. If you are involved with charitable organizations, maybe you purchased life insurance to support them instead. Consider why you bought your life or final expense policy before finalizing your choice of beneficiary.
Make Sure You Have a Backup Beneficiary
In some cases, your insurer may be unable to locate or contact the first beneficiary that you selected. The beneficiary may also choose to decline the funds, meaning they will be left to a contingent beneficiary. To ensure that your death benefit ends up in the hands of someone who will use the money as you see fit, make sure you have a secondary beneficiary listed in your life insurance policy.
Don’t Choose a Minor To Be Your Beneficiary
If you die with a minor listed as your primary beneficiary, state regulations may limit how much a minor child is able to accept from the death benefit. In such cases, a court will appoint a guardian to administer the funds to the child in question. This process can be incredibly time consuming, as it requires multiple court appointments. To avoid this process, you can either set up a trust where the death benefit will be held, or appoint an adult to directly oversee distribution of funds to the minor child.
What Will Happen If You Don’t Choose a Beneficiary
If you don’t designate anyone to be your beneficiary, your death benefits will be paid directly to your estate. In such cases, a probate court will be given responsibility for deciding how those funds will be handled. When this happens, some of your proceeds may be lost to the process and your loved ones may not receive the full amount of your death benefit. To avoid this issue, don’t wait to choose your beneficiary.
We Can Help You Select Your Beneficiary
When you choose Final Expense Direct to help you with your final expense insurance coverage, we will advise you on how you can choose the best possible beneficiary to receive your death benefits. To get started with a free quote, give us a call at 1-877-674-0236.