Beneficiary Overview

What is a beneficiary?
A beneficiary is the individual or entity designated to receive a life insurance or annuity death benefit upon the death of the insured or the annuitant, also referred to as the primary beneficiary. Some policies have more than one beneficiary. The contingent beneficiary is a secondary or alternate beneficiary, who receive the policy's proceeds if no primary beneficiary is living when the insured or annuitant dies.

An irrevocable beneficiary is a beneficiary whose interest cannot be revoked without that individual's written consent, usually because the policyowner has made the beneficiary designation without retaining the right to revoke or change the designation.

What should I consider in naming life insurance beneficiaries?

• Always name a "contingent," or secondary, beneficiary, just in case you outlive your first beneficiary.
• Select a specific beneficiary, rather than having the proceeds of your life insurance paid to your estate. One of the great advantages of life insurance is that it can be paid to your family immediately. If it is payable to your estate, however, it will have to go through probate with the rest of your assets.
• Be very specific in wording beneficiary designations. Saying "wife of the insured" could result in an ex-spouse getting the proceeds. Naming specific children may exclude those born later. If your child dies before you, do you want the proceeds to go to that child's children? Changing the beneficiary designation is easy, but you have to remember to do it. Due to the various issues involved, an agent can be an excellent source of information to help you properly set up your beneficiary designation.

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