When taking a life insurance policy in your name, you will also be required to assign a beneficiary. Ensuring that the right person is entitled to receive the proceeds of your claim will give you peace of mind. Below, we look at four things a senior person needs to consider when choosing a beneficiary for the life insurance policy.
You have a wide range of options when it comes to designating a beneficiary. Unlike popular belief, you need not have any relation to the beneficiary to consider them as legitimate receives or the claim. As long as you name them in the policy, it holds legal value. And the beneficiary need not be even a human being. You can name a company or nonprofit as the beneficiary.
Will Vs Life Insurance
Life insurance stipulations have more legal weight than a will. This is because a life insurance is a written legal contract. As such, whatever it sees as the beneficiary will have to be accepted, unlike a will which can be contested in court. So, if you name one person as a beneficiary in life insurance and a second person as the receiver of the will, then the second person will have no right to challenge the claim of the first person. And if you think that the claim must be received only by the first party, then you have to make the appropriate changes in the life insurance contract, removing the first person and adding in the second person.
A minor, who is named as the beneficiary, is usually not allowed to receive funds from the insurance company in case of your death. In such cases, the court will appoint a guardian to take care of the funds. This can turn into a very lengthy process and might be detrimental to the minor’s interests. You can avoid this by designating a guardian at the time of signing the life insurance contract. This will ensure that the minor does not have to go through unnecessary legal complexities. Plus, when you mention a guardian in the contract itself, you can choose the people whom you trust. This will ensure that the child will actually receive the funds when he becomes mature.
Back Up Beneficiary
You also need to add up two or three back beneficiaries. This will ensure that if the primary beneficiary dies somehow, then the claim is given to a third beneficiary. For example, if you and the primary beneficiary were to be in an accident together, then the other beneficiaries will get the claim.
And to get a good policy for your loved one, consider looking at life insurance for seniors over 70 from LifeNet Insurance Solutions. You can also consult them if you have any more doubts regarding the topic of beneficiaries.