Designating Beneficiaries for Life Insurance

+Life insurance will provide your loved ones financial security. Most policies allow for multiple beneficiaries, which is an advantage for parents with several children. However, before designating the beneficiaries for your policy keep in mind the following pointers:

Deciding between primary and contingent

Naming both primary and contingent beneficiaries is important. The person you named as a primary beneficiary will receive the proceeds of your life insurance. However, in cases when the primary beneficiary is no longer living, contingent beneficiaries will get the life insurance proceeds.

When appointing a minor

When naming minors as the beneficiary there are some things to consider. The proceeds of your life insurance won't be given to your child directly if he or she is still a minor. Thus, you need to set up a trust and name your spouse, relative, or friend as the adult custodian until your child becomes of legal age.

When undergoing divorce proceedings

You named your spouse as the primary beneficiary of your life insurance and you amicably decide to go your separate ways. In this situation, know that you have the option to change the beneficiary provided that you didn't apply for insurance with an irrevocable beneficiary designation. An irrevocable beneficiary designation can only be changed if your spouse gives his or her consent.