When you purchase a life insurance policy, you’ll need to decide who the beneficiary is when you pass away. For many people, that person is their spouse or children. There’s always the possibility, though, that the designated beneficiary of the policy will pass away before you do. To ensure that the policy payout goes to the person you want it to, and they receive the entire amount, you need to stay on top of your designations and make changes as needed. 

Who Gets Your Life Insurance?

If the primary beneficiary on your life insurance policy dies before you, and you do not make any changes, the payout will go to the secondary or contingent beneficiary. Although you aren’t always required to name a secondary beneficiary, doing so ensures that your life insurance policy is paid to a specific individual. If you do not have a secondary beneficiary, then the policy will become part of your estate and subject to all of the applicable laws of your state in terms of probate proceedings and taxes. This can significantly reduce the amount the beneficiaries receive and extend how long it takes to get the payout.

Naming a contingent beneficiary is recommended, as it ensures that you control how the proceeds are paid out. You can name several beneficiaries to your policy. If you do, the payout will be split evenly among them. Should one of the beneficiaries die, the other party will receive their portion of the payout.

You don't need to name an individual, either. You can designate a favorite charity, school, or organization as a primary or contingent beneficiary. This ensures that your investment in premiums isn’t diminished by estate taxes.

How Are Beneficiaries Managed? 

To make sure you always have a say in where your death benefit goes, keep your life insurance policy and beneficiary designations up to date. Insurance companies allow you to make changes at any time, as you can do so via your insurance agent or directly with the insurer via mail or online. It’s best to have both a primary and a secondary or contingent beneficiary in place and to make changes right away if circumstances change.   

For help making sense of your life insurance options and managing your policy, turn to Truax Insurance in Ogdensburg, NY. These experienced and knowledgeable agents can help you select from reliable policies offered by trusted carriers that meet your needs and budget. They also provide home, auto, and commercial insurance for all your needs. Call (315) 393-3805 to schedule a consultation or visit their website for more information.