How to pick the right life insurance beneficiaries

It's critical to correctly choose your life <a href=insurance beneficiaries.  / Credit: Getty Images” src=”https://s.yimg.com/ny/api/res/1.2/vOqat35BjNoH8LmyQW09Fg–/YXBwaWQ9aGlnaGxhbmRlcjt3PTcwNTtoPTQ3MA–/https://s.yimg.com/uu/api/res/1.2/Ler2XH.OGptLtGsAEIMlhQ–~B/aD0xNDE0O3c9MjEyMTthcHBpZD15dGFjaHlvbg–/https://media.zenfs.com/en/cbs_news_897/a4516b0649164c42e02758b9c76c9476″/

It’s critical to correctly choose your life insurance beneficiaries. / Credit: Getty Images

The benefits of having a life insurance policy are multiple.

In exchange for a monthly or annual payment to a life insurance provider, your beneficiaries receive a pre-determined sum of money after you die. The amount of money can range from tens of thousands of dollars to millions.

So it’s important to have the right amount of coverage. But it’s equally as important to make sure your beneficiaries are properly chosen and added to your policy. There’s no real point in setting up a comprehensive policy if you don’t have any beneficiaries – or have listed the wrong ones.

If you don’t have life insurance – or want to boost the coverage you have – now is a good time to act. Don’t hesitate and get a quote today.

3 tips for choosing life insurance beneficiaries

Here are three smart moves to make when picking (or adjusting) your life insurance beneficiaries.

Go back to the basicsDon’t just list oneBe careful when listing minorsGo back to the basics

When you get insured for a significant sum it can be tempting to list a variety of people as beneficiaries – but pause before doing so. Go back to the basics and remember the main reason for initially getting a plan.

Is this policy primarily to support your children after you have died? Then they should be on top. If you want to leave it to your spouse to make up for lost income in your absence then they should be listed first. Or, if you want the policy to be used to keep a family business going, then adjust the beneficiaries accordingly.

In short: don’t lose

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Make Sure Your Life Insurance Compliments Rather Than Complicates Your Estate Plan

Life insurance is a valuable tool to protect your family, and potentially your business interests after your death. Your estate plan is the collection of legal documents that include directions about what should happen to your assets upon your death. Your estate plan could include either a Last Will and Testament or a maybe a Living Trust. One of the most common problems I discover when I review existing planning with clients or potential clients is the failure to coordinate the outcome of a will or trust and the outcome of life insurance proceeds. Let’s examine some of the potential problems this can create so that we can avoid them.

First, I regularly find that clients have all of their children named as the beneficiaries of their estate through a will or trust if their spouse does not outlive them, but their life insurance policy does not list their children as back-up beneficiaries. Or, perhaps the policy only lists one of their several children as beneficiary. This could be done purposely (perhaps one child is meant to receive all of the life insurance proceeds but will not receive as much as the other children from the other assets of the estate). More often, however, the life insurance beneficiaries have been named without any thought or understanding about the bigger picture of how the rest of the estate will be divided. This can lead to one or more children receiving a much larger share of inheritance than the others (which is perfectly fine if that is your intent, but you don’t want this to happen just because of poor planning).

A nightmare scenario can occur in a blended family/second marriage situation where life insurance beneficiaries were never updated after a divorce, prior spouse’s death, or other life event changes. Whether or

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