When you buy a life insurance policy, you’re purchasing one with a specified death benefit amount. This amount will then go to a loved one, charity, or other organization after you pass away. Any recipient of a death benefit is known as a beneficiary.
Who Can I Choose?
Life insurance policies are flexible. A beneficiary can be anyone you know – it can be your friend, a relative, or even a charitable cause.
You’re not limited to choosing one beneficiary. You can name multiple beneficiaries and divide the death benefit between them as you see fit.
How Would a Beneficiary NOT Get the Death Benefit?
In some instances, beneficiaries may not get the death benefit that the policyholder signed up for.
This can happen with Term Life insurance policies. Since they’re active for a limited number of years, your beneficiaries won’t receive the death benefit if you outlive your policy.
Another way is if you signed up for a policy very late in life. If you enrolled in a guaranteed issue policy for instance, you may have done so because of an inability to obtain other policies as a result of being in poor health. These typically come with waiting periods, which require you to pay premiums for roughly 2-3 years before your beneficiaries can get the death benefit. If you pass away during the waiting period, your loved ones may be left empty-handed.
You’re also able to adjust beneficiaries, which can be due to one passing away or a change in preference.
What Should I Consider Before Choosing?
The first to consider is socioeconomic status. This point may not only influence who you choose as a beneficiary, but also the size of the policy you sign up for and the amount allocated if you have selected multiple individuals.
Your loved ones have personal debts and routine payments to make. Some will have this to a greater extent. While it’s unlikely your loved ones will fully disclose their personal financial situations, there are signs that can point toward financial hardship. Signs include current job title, living conditions, number of children or other dependents to provide for, and age (those at a younger age are more likely to be less financially secure).
What Happens When They Get the Death Benefit?
One of life insurance’s best features is that the death benefit is not subject to taxes. Your beneficiaries will get 100% of the amount you have agreed to. They’ll be able to use those funds for any purpose.
Aside from personal expenses, your beneficiaries may use the death benefit to help pay for your medical costs and funeral expenses.
Begin Your Path Today!
At Game Changing Benefits, we will find you a life insurance policy that meets your needs best. This is your chance to leave behind a legacy, and to provide for your loved ones to make their future easier and brighter. Call us today at 972-331-1060 to learn more about the life insurance options available to you!