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Buying life insurance will financially protect your loved ones after you pass away. However, it will only serve its intended purpose if you choose your beneficiary correctly. The following tips will help you make the right designations when purchasing coverage.

How to Choose Your Life Insurance Beneficiaries

1. Understand Your Options

You have more options than just your spouse or children. You have the authority to name any individual or organization as your beneficiary; therefore, the money can go to a single person, multiple parties, a charity, or a trust. Keep in mind that minor children cannot receive life insurance benefits directly, so the payout must be managed through a trust instead.

2. Be Specific 

One of the biggest mistakes people make when designating life insurance beneficiaries is not providing enough details about their selection. If you simply write “spouse” or “children,” your insurer may have difficulty locating them. Be as specific as possible when filling out your beneficiary’s information, including their full name, address, and a way to contact them. If you have multiple beneficiaries, you should also leave instructions on how you want the payment divided.

3. Name a Contingent Beneficiary 

life insuranceWhile it’s not required, you should name a contingent beneficiary in the event your first choice is unable to receive the payout. This can occur if the primary beneficiary passes away before or at the same time as you, can’t be found, or refuses to accept the funds. Without a beneficiary, it will be up to the probate court to decide how your policy’s benefits should be distributed. 

4. Consider Your Beneficiary’s Circumstances 

In some cases, naming a beneficiary can have unintended consequences. For instance, if they rely on Social Security or collect benefits through another government program, getting a life insurance payout could affect their eligibility to continue receiving this income. Before adding a beneficiary, look into their need for federal financial assistance.

 

If you’re looking for reliable life insurance to secure your family’s financial future, contact the professionals at Mutual Underwriters. They will help determine what type of policy and amount of coverage is most suitable for your needs as well as advise you on designating a beneficiary. For more than six decades, the agency has provided residents throughout Honolulu, Waipahu, Wailuku, Kona, and Hilo, HI, with high-quality and competitively priced products. Call (808) 532-2888 to request a quote, or visit their website for more information on the insurance plans they offer.

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