Obtaining a life insurance policy is a great first step toward financial responsibility. Besides purchasing coverage, it is important to review your life insurance beneficiaries. It may be equally important to make updates at each major life event: Marriage, divorce, birth of a child, retirement, a death in the family, the creation of a will or trust, etc.
In addition to naming a primary beneficiary you have the right to list backup or contingent beneficiaries so you can still control who receives the benefits if you and your primary beneficiary are in a common accident. Especially after having a policy for many years, we tend to get comfortable and forget to make updates.
There have been incidents that have gone to court where a re-married person failed to name their new spouse as their beneficiary. Therefore, at their death the life insurance proceeds went to the ex-spouse whom was still designated.
If you don’t list a primary or contingent beneficiary, it’s is likely the benefit will go to your estate, which may lead to issues concerning the probate process. Probate can be a hassle and be costly, which may reduce the benefit you intended your heirs to receive.
A final point to consider is how to name minor children as contingent beneficiaries. If not designated correctly the children may have to wait to age of majority to receive the proceeds, at which point they would receive it as one lump sum. You may prefer a custodian handle the money in a way that would benefit the kids as they grow.
For a complimentary, no hassle review, reach out to the professionals at Veracity Financial Services.