Life insurance is an essential risk management tool that helps you take care of someone else in the event that you're not around to provide for them. Your policy beneficiary receives a death benefit—or an amount of money predetermined by the size and cost of the policy—upon your passing. Here’s how to wisely select your beneficiary.

5 Tips for Choosing a Life Insurance Beneficiary

1. Understand Your Options

You may—but do not have to—choose a person as your beneficiary. You may split the proceeds among multiple recipients, and you may name non-person legal entities—such as a charity or a trust—as your beneficiary. Naming a trust account as beneficiary is a good idea if you have young children; the trustee you name to manage the account will provide your children with necessary funds, as per your directions. A charity is a good choice if your dependents are all grown and self-sufficient.

2. Consider Who the Benefit Is For

Who do you want the proceeds to benefit? If they are adults of sound mind, simply name them as the beneficiary. If they are children, consider setting up a trust. But, be aware that you may inflict unintended consequences. For instance, an aging or infirm relative may no longer qualify for state-sponsored care if he or she suddenly comes into a life insurance windfall.

3. Be Specific

Use names when listing beneficiaries; don't just say, "My son," or "My brother." Even if you only have one son or one brother, use of first, middle, and last names in addition to the relationship removes any possibility of confusion and ensures your wishes are followed.

4. Name Backups

In addition to primary beneficiaries, you can also name secondary and tertiary beneficiaries who will receive the benefit if the primary recipient cannot be located, refuses the benefit, or has passed away. Naming backup beneficiaries allows you to remain in control of the distribution even if things don't go as smoothly as you planned.

5. Update Your Plan Occasionally

As situations change, you may wish to name a different beneficiary. For instance, your previous beneficiary may now be financially independent, have passed away, or have become estranged from you. Therefore, you should periodically review the document and make any necessary changes.

To discuss your life insurance options with a friendly and experienced agent, contact Stringer Insurance Agency in Dahlonega, GA. They've been serving businesses and individuals in and around Lumpkin County since 1931 and also specialize in home, health, and auto insurance. Visit their website to connect with them on the web or call (706) 864-3515 to request a life insurance quote.