Term Life Insurance Articles
When To Name A Contingent Beneficiary For A Term Life Policy
2010-05-19
Term life insurance is an insurance product that provides financial protection for the surviving spouse and children if the insured person dies while the policy is in force. A term life policy is one that is in effect for a specified period of time, which could be 10, 20, or 25 years. Once that period of time is up, the policy will expire unless the insured renews it or converts it to a whole life policy. It will help to pay off any outstanding debts such as a mortgage, loan, post-secondary tuition costs, or a car payment.
When purchasing a term life policy, the insured will often be asked by the insurance agent who they would like to name as a beneficiary. A beneficiary is the individual, estate, or organization to which the death benefit will be paid to. Although a beneficiary can really be anyone that the insured chooses, it is normally their spouse, child, or children. Because life is filled with uncertainty and we never know exactly when we are going to pass away, complications could arise when a beneficiary is named. What if both the insured and named beneficiary pass away at the same time? What if the beneficiary dies before the insured? This could cause a lot of confusion when it comes time to file a claim.
This is why a contingent beneficiary should be named. This is essentially a second beneficiary who will receive the death benefit if the primary beneficiary cannot receive it for some reason. For example, a spouse may be named as the beneficiary of a life insurance policy, and if the spouse dies before the insured, the death benefit will then revert to the children, other family members, or even a friend. Again, this would work if the main beneficiary died first or was deemed unfit or ineligible to receive the death benefit.
By naming a contingent beneficiary, you will ensure that the funds go to a loved one or a cause that is important to you. There are really no qualification factors that have to be met other than the beneficiary being able to take control of insurance assets. No one wants to think of what will happen if they die or if their named beneficiary dies, but as mentioned, unforeseen events can happen and it is best to be fully prepared for any possibility. You will have peace of mind knowing that your family members will be well taken care of after you are gone and the insurance claims process will go through smoothly for them. The last thing they will need is to compound their grief with unnecessary paperwork and stress.
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Term life insurance is an insurance product that provides financial protection for the surviving spouse and children if the insured person dies while the policy is in force. A term life policy is one that is in effect for a specified period of time, which could be 10, 20, or 25 years. Once that period of time is up, the policy will expire unless the insured renews it or converts it to a whole life policy. It will help to pay off any outstanding debts such as a mortgage, loan, post-secondary tuition costs, or a car payment.
When purchasing a term life policy, the insured will often be asked by the insurance agent who they would like to name as a beneficiary. A beneficiary is the individual, estate, or organization to which the death benefit will be paid to. Although a beneficiary can really be anyone that the insured chooses, it is normally their spouse, child, or children. Because life is filled with uncertainty and we never know exactly when we are going to pass away, complications could arise when a beneficiary is named. What if both the insured and named beneficiary pass away at the same time? What if the beneficiary dies before the insured? This could cause a lot of confusion when it comes time to file a claim.
This is why a contingent beneficiary should be named. This is essentially a second beneficiary who will receive the death benefit if the primary beneficiary cannot receive it for some reason. For example, a spouse may be named as the beneficiary of a life insurance policy, and if the spouse dies before the insured, the death benefit will then revert to the children, other family members, or even a friend. Again, this would work if the main beneficiary died first or was deemed unfit or ineligible to receive the death benefit.
By naming a contingent beneficiary, you will ensure that the funds go to a loved one or a cause that is important to you. There are really no qualification factors that have to be met other than the beneficiary being able to take control of insurance assets. No one wants to think of what will happen if they die or if their named beneficiary dies, but as mentioned, unforeseen events can happen and it is best to be fully prepared for any possibility. You will have peace of mind knowing that your family members will be well taken care of after you are gone and the insurance claims process will go through smoothly for them. The last thing they will need is to compound their grief with unnecessary paperwork and stress.
