By Marnina Delahanty
What’s a “Beneficiary?”
When someone with an active life insurance policy dies, the insurance company pays out a death benefit. The recipient is called the “beneficiary,” and there can be multiple beneficiaries. Initially, beneficiaries are chosen by the policy owner when the application is written. The owner can then change beneficiaries at any time after the policy goes into effect. Let’s take a closer look.
What’s a “Contingent Beneficiary?”
When the application is being filled out, the policy owner also identifies a contingent beneficiary. Think of this as a back-up to the primary beneficiary. Again, a number of contingent beneficiaries can also be asigned. If the primary beneficiary is deceased, missing, or refuses their inheritance, the payout then goes to the contingent beneficiary(ies).
Who/What Can Be a Beneficiary?
Beneficiaries come in many shapes, sizes, and quantities. People most commonly choose their spouses as their primary beneficiaries. In community property states applicants need a spouse’s consent to name someone other than their spouse. The ten community property states are California, Idaho, New Mexico, Texas, Arizona, Louisiana, Nevada, Washington, Wisconsin, and Alaska.
A beneficiary can be a person, a number of people, a business, a charity, a non-profit organization, or a legal trust or estate. Here on the Asurea Blog, we'll explore each of these in depth in future posts. If there are a number of beneficiaries, the death benefit can be divided among beneficiaries as the policy owner chooses.
Why Review Policies Annually?
Adapting the beneficiaries and distribution of death benefits to reflect new realities is one reason it’s crucial to hold a policy review every year to keep the policy up-to-date. Maybe a beneficiary who seemed so responsible last year that she warranted the majority of the death benefit can no longer be relied on to spend the money for its intended purpose. Maybe there’s been a brith, death, divorce or marriage. Maybe a business is upscaling, and would benefit by switching from term to a permanent policy building cash value the business owners can use in retirement.
Any number of situations arise that make Annual Policy Reviews imperitive. Asurea helps customers keep their life insurance in sync with their changing needs. Call today to protect your family by securing a new policy, or simply making sure the policy you now hold meets today’s realities.
Asurea: 916-888-1807 or 800-689-5490 x121