Life Insurance Blog

Selecting one’s beneficiaries on a life insurance policy is not always an easy task for policyholders. Relationships can become strained and even estranged, people advance in age and no longer really need the money they would receive from a death benefit, or sometimes the policyholder simply does not know enough people to inform their decision as well as others might be able to.Below is a list which might help life insurance policyholders know who to choose as beneficiaries for their policies.

Dependants are priority

Most life insurance policies are arranged with dependants in mind, and dependants in this context are most often children who are still under the care of the policyholder. There is good reason to make dependants the beneficiaries of a life insurance policy. They rely heavily on the income that the policyholder provides to the family, and without that financial support then they might be unable to pay routine bills, cover funeral and burial costs for the insured individual, pay down the home loan each month, purchase groceries or have money for medical care. By arranging for one’s dependants to receive the death benefit upon the insured’s passing, they are guaranteeing that their grieving and hardship will be lessened somewhat in the days and weeks ahead.

Spouses, partners, or significant others are priority

Assuming that there are no dependent children living in the home, policyholders must consider the importance of their spouse, partner or significant other when naming their beneficiaries. They can be hit in their bank accounts just as hard as families with children, and there are many financial obligations that they may not be able to satisfy in the wake of the policyholder’s death minus the support of their regular income. Naming one’s spouse, partner or significant other as a beneficiary can alleviate much of that burden.

Loved ones paying funeral and burial costs are priority

What happens if a policyholder has neither children nor a significant other who they may name as a beneficiary? In this case, the policyholder must determine who is most likely to be responsible for arranging their funeral and burial services. Parents are generally a good choice for this as they typically desire some sort of ceremonial closure in the event that their child passes away. It may be another family member who receives the payout, or it could even be a close, trusted friend. Whomever the policyholder chooses should be notified of their selection ahead of time so that they know to expect it as well as the insured’s funeral wishes.

Charity is a priority

Lastly, if the policyholder has neither dependants, significant others or close family or friends whom they feel may benefit from a life insurance cash out, then they could consider listing a charitable organisation as a recipient. In this way, the insured is guaranteeing that the cause of their choice will receive a substantial sum of money to be put towards a greater good. A twist on the charity idea includes donating the life insurance payout to a needy friend or family member who can greatly benefit from a boost in funds. It may be that they know someone who is struggling to make it through school, wants to open their own store or start their own business, or has fallen on hard times and struggles to meet their bills. Whatever the situation, listing such beneficiaries can be a great way to leave a lasting and valuable legacy.