Term Life Insurance Articles
Choosing Your Beneficiaries Under A Term Life Insurance Policy
2010-07-23
In a term life insurance policy, regardless of the period of time for which the policy applies, choosing a beneficiary is an important and delicate matter that must be taken seriously. Term life beneficiaries are the people designated to receive proceeds upon the death of the policyholder. To decide who will be your beneficiary, it is worthwhile to check your term life insurance quotes to gauge the payable amount on a policy, as well as premiums and premium increases over time.
As with all life insurance policies, the best way to approach choosing a beneficiary is to consider as many possible scenarios as you can. For instance, do not name the beneficiary "wife" or "husband" without giving the name of the spouse; you could risk having proceeds paid to an ex-spouse. Divorce is just one of many events to consider, even if your policy exists for only a five or ten year period.
Even if the policy runs for twenty or thirty years, remember that if something happens to you this year, your money could fall in the hands of your underage child. In that case, stipulate a guardian or trustee to look after the money until your child is of an appropriate age. In situations like these, consider term life insurance quotes for different time periods so you can better understand the amount of proceeds that would be paid on any given year.
Wording is crucial when designating a beneficiary. Be specific. The word "children" could incorporate stepchildren, or it could exclude adopted children. Meanwhile, naming specific children as beneficiaries could mean children born in the future receive none of the funds. Phrasing is something to be cognizant of and to read through periodically to ensure that the policy company properly understands your intentions.
Unless you have a designation that cannot be reversed, such as in the case of divorce settlements, changing the names of beneficiaries is something you can do at any time. You might not have fully thought out possible events that could transpire after your policy begins, so be sure to check your plan frequently enough to keep the information up to date. Identify secondary, also known as "contingent," beneficiaries in case your primary ones pass away before you do.
So remember that choosing term life beneficiaries requires you to pay attention to possible future scenarios, wording, and the time period for which the policy is enacted. You cannot be too careful when choosing a beneficiary; mistakes can have effects that are literally beyond your control. Be specific, clear, and thoroughly explicit. Providing exact names is better than generalizing "offspring" or "spouse." Always remember to make sure your policy is exactly the way you want it.
