What you need to know about choosing the person(s) who will receive the payout if you pass away.
If you decide to have more than one beneficiary, you will allocate a percentage of the death benefit for each, so that the total allocation equals 100%. A simple example of this would be allocating 50% to your partner, and 25% to each of your two children, for a total of 100%. When your death benefit is paid, your beneficiaries will receive the percentage based on your allocations.
Alternatively, you can choose a primary and contingent beneficiary. Your primary beneficiary will receive the death benefit if they are still living at the time of your death. Otherwise, the death benefit will be paid to your contingent beneficiaries. For example, you have named your partner as your primary beneficiary with 100% allocation, and your two children are named as your contingent beneficiaries, each with a 50% allocation. If your partner passes away before you do, then your children will receive the death benefit. It’s a good idea to name a contingent beneficiary, since it’s possible that your primary beneficiary could pass away before you do.
When naming a beneficiary, there must be an insurable interest present, which means that with whoever you select relies on you for some kind of financial support. Many people choose their partner as their beneficiary, but you can also name a parent, sibling, child, or close friend—anyone you would want to provide financial support for in the event of your death.
If you’re naming a minor as a beneficiary (like your child), consider the fact that many insurance companies do not pay benefits to someone under the age of 18. In that case, you can name a person close to them, like a grandparent as beneficiary, or establish a trust for the minor to help guarantee they will receive the payout.
Because things can change over time, review your beneficiary designations every few years and make any necessary updates. If you need to make any changes to your beneficiary designation, reach out to our team and we’ll help you make those updates. And always, make sure your beneficiaries have the necessary policy documents and company information.