Many people purchase insurance, but don’t bother to tell their beneficiaries or anyone else. To ensure that your beneficiaries are properly notified after your death, you should not delay in informing them about the policy. Important to remember that your insurance provider has no obligation to locate your beneficiaries. You, as a policyholder should give instructions on what to do if the primary beneficiary is not available to collect the payment.
1. Copy of the policy
Keep a copy of your policy to ensure that your loved ones receive the benefits. You can inform your lawyer if you don’t want your beneficiaries to see that your policy has named them. It doesn’t matter what you do, just make sure someone is aware of it. Give someone the name and address of the insurance company. Also, tell them where you can find the policy.
2. Secondary beneficiaries
It may be important for the policyholder to have a secondary beneficiary in the event that the primary beneficiary is unavailable. For those who don’t have children or relatives, this is a crucial step. Some people choose to give the proceeds of their insurance to their favorite charity. Most policyholders leave the proceeds to their spouse. If the spouse is unable to receive the benefits due to illness or death, the proceeds are transferred to their secondary beneficiaries, who could be children, parents, or charity.
3. Minor children
Children under 18 years old cannot legally receive the proceeds of an insurance policy until they turn 18. If they are named beneficiaries, the money must be held in trust until their age. This is especially true if the parents die while the children are still young and the caretaker can’t access the money.
4. Naming beneficiaries
You should be specific when naming beneficiaries for your term life insurance policy. You should not use terms such as spouse, child, parent or children. If you use vague terms, and you have a new spouse it can lead to serious problems when it comes time to file the claim. If your situation changes, make sure to update the beneficiary information.
For life insurance, you can select as many beneficiaries as possible. You can leave money to one person or multiple people.