All life insurance policies require the policyholder to name a beneficiary who will receive payment after they die. The beneficiary is usually a child or spouse, but it can also be a trust, charity, or your estate. In fact, you can name more than one beneficiary, and can even specify the percentage of the payout you want to go to each one.
Most life insurance policies ask you to pick two kinds of beneficiaries: a primary and a secondary. The secondary beneficiary, sometimes called a “contingent beneficiary”, will receive payment if the primary beneficiary dies.
Naming Your Children as Beneficiaries
One of the most common reasons people purchase life insurance is to provide for their children after they pass away. Most parents name the surviving spouse the beneficiary to care for and raise the children. This is because life insurance can’t be paid out to minors. If a child under the age of 18 is named a beneficiary, the payment would be turned over to the probate court where a guardian will be named to oversee the money until the child becomes an adult. You can also name an adult custodian you know to handle the money for your child until they become of legal age, or you can set up a trust with specific instructions for how the life insurance money should be distributed.
Naming a Charity as Your Beneficiary
If you have an important cause that is near and dear to your heart, you might want to name a charitable organization as the beneficiary of your life insurance policy. You can do this the following ways:
- Name the charity as a beneficiary on a new or existing life insurance policy
- Make the charity both the owner and the beneficiary of your life insurance policy
- Add a charitable-giving rider to a life insurance policy
- Work with a community foundation to determine the best way to distribute the payout
Do you have more questions about life insurance beneficiaries? Then call our Atlanta insurance administrators to get help from our dependable team members. Schedule your consultation today.