Protecting your loved ones financially following your death is a concern for many. Life insurance can provide a payment to your loved ones if you pass away while the policy is in place.
This is an important tool for many families. Life insurance can help to replace the income your family loses as a result of your death. However, as the policyholder, you get to make key decisions about this policy and who can access it.
What Is a Beneficiary?
A life insurance beneficiary is a person you, as the policyholder, name in the plan. This person will receive the funds from the life insurance policy at the time of your death. You can choose one person or several.
Most commonly, a spouse is the beneficiary. Children can also be a common choice. If your children are young, you will name a trustee or guardian who will oversee them. Doing this allows you to add far more controls over how your named recipients use the funds.
This is ideal when children are young and you wish to leave money behind for them. In this case, you will name a trustee who will oversee the use of the funds. The trustee will be in charge until your children are old enough to manage funds on their own.
Who Should You Choose as a Beneficiary?
There are a few things to remember before making the decision on a beneficiary:
- Who are your dependents now? These are the people who would most likely need financial support after your death.
- If you do not have dependents, you can name a charity or third party to benefit from your life insurance.
- There is no law or rule that says a spouse has to be the beneficiary. You can name anyone you like.
- Once you name a beneficiary, that person will gain complete control of the money after your death. Therefore it is very important that you consider the beneficiary’s age and ability to manage their financial affairs. A trustee or guardian for the funds may be warranted dependent upon their situation.
- You can change your beneficiary at any time that the policy is in place and you are competent to do so.
Work with a life insurance agent to talk about your situation. Determine the best route to protect your loved ones after your death. You can select the amount of coverage you want and need along with who you wish to benefit from these funds.
Ten Eyck Group is here to help you make these choices. If you have questions about selecting an Albany life insurance policy, call us at (518) 464-0059.