We know that it is often an uncomfortable topic to think about, but the truth remains: buying life insurance is not meant for you as an individual, it is meant for the people that you will leave behind once you’ve passed on. The goal is to have a policy in place that will cover all of the needs of your family long after you are gone.
However, life insurance, like wills, must be designated to go to a beneficiary. Your Life Insurance policy is typically quite open about who you leave the benefits to, and this can be especially true for a Term Life Insurance policy. It can be advantageous to build in some flexibility when you prepare your life insurance policy and there are a number of decisions you must make when preparing your policy.
One thing to consider is how to divide the benefits of a policy among your the children or people you wish to leave the benefits to. Policyholders who have just a spouse, or an only child, may not be faced with such a dilemma. However, for policyholders that have multiple children, it is easy enough to divide the benefits of a life insurance policy. In order to help determine how you divide the benefits of a Term Life Insurance policy, ask yourself, how much will each person need if I were to pass?
One more thing to keep in mind when you designate a beneficiary is being quite specific about each member of the family. While you may have one spouse when you purchase your policy, it may end up that you have remarried before you pass away. If you have just designated that your policy go to spouse, the policy will be split between your past and present spouses. It is better to be specific, and should you remarry, make sure you change the name of your beneficiary or the allocation.
Another item to consider is leaving the policy to your estate instead of a specific beneficiary. By leaving your policy to the estate, the payout of the policy will be used to cover any debts left in your estates name, such as a mortgage. However, if you choose this route, you should be aware of the taxes that will be levied against the policy.
One other possibility is leaving some or all of your benefits to a charity you support. You dont have to leave your entire policy to the cause or organization, however it is an easy way to leave a lasting legacy. A great way to consider all of your options is to speak with a qualified independent insurance agency, like SelectQuote.