Importance of naming a beneficiary
You think you have everything under control. You work hard, pay your bills on time, invest wisely and have life insurance. What if you passed away tomorrow? Do you know who would inherit your assets? While not pleasant to consider, should the unthinkable happen, it is critical you are prepared. Part of that preparation is naming a beneficiary for your life insurance.
Why should I designate a beneficiary? Life Insurance provides a benefit to a named beneficiary or beneficiaries upon the death of a person insured under a policy. Let’s say you have life insurance coverage with a death benefit of $100,000. That’s a lot of money, which is why you want to make sure it is payable to the individuals you have specifically designated to receive those proceeds. If you’re prepared, you’ll have named your beneficiaries and indicated the specific percentages each beneficiary is to receive. Doing so means they will likely have easier access to the death benefit’s funds. This is especially important, since the death of a loved one often brings about unexpected expenses. Be sure to designate beneficiaries when completing the initial enrollment form for coverage. Beneficiaries should be kept up to date and reviewed when life changes occur such as marriage, births and divorce. If you never get around to completing and submitting your beneficiary forms, your intentions have not been made clear. That means the death benefit will be paid as outlined in the certificate of coverage. If your estate is named, then the assets become a part of the overall estate and thus are retained until distributed by your executor or personal representative. Can I name someone with special needs as a beneficiary? Before naming a loved one with special needs as a beneficiary, consider the impact it could have on any government benefits he or she may currently receive. It is important to consult with a legal and/or tax advisor when considering naming a beneficiary and especially when naming a minor or individual with special needs as beneficiaries.
Did you know... …for some life insurance, when no beneficiary is named, death benefit proceeds are paid in an order of preference, i.e., spouse, children, parents, siblings? Other life insurance have death benefits default to your estate. …when the insured dies, beneficiaries are fixed and no changes can be made? ...the percentage interests of all primary beneficiaries must add up to 100%? This is true of contingent beneficiaries as well.
ReliaStar Life Insurance Company, a member of the Voya ® family of companies
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