Life insurance is an essential thing to consider when it comes to your family's health and financial well being. The after-death benefits of a life insurance policy can help your family to meet all the funeral expenses and the outstanding debts. However, it is essential to review your life insurance policy and the listed beneficiaries on a regular basis because according to the changing situations, your needs will change over time.
What life insurance beneficiaries actually are:
A life insurance beneficiary is an individual who will get the benefits of your insurance policy after you expire. There are mainly two types of beneficiary:
1. Primary beneficiary - The individual who will get all the life insurance benefits (payouts).
2. Contingent beneficiary - This individual will get the benefits in absence of the primary beneficiary.
You can have multiple primary beneficiaries, in which case you'll need to specify the percentage each one will receive. You should also have several contingent beneficiaries in the event your primary choices are unable to accept the payout.
While buying the first life insurance policy, you need to list some beneficiaries. Over the lifespan of your coverage, your relationship might change with the beneficiaries. For example, your wife or husband may become your ex, your kids may deny to live with you and move to another country, etc. You might have to leave it all to your pet’s name.
So, it’s important to settle down and consider reviewing your beneficiaries so that your death benefit can be handed over to the needy and safe hands.
There are some life-changing situations when you might need to evaluate the names of your beneficiaries. Those situations may include marriage, divorce, newborn kids, home-buying, etc. Apart from those, there are some other life events that may push you for reviewing your life insurance policy and beneficiaries.
Situations when you may review your beneficiaries and related policies:
While choosing a term life insurance or a permanent insurance policy, or your beneficiaries, make sure you must review your insurance coverage in the below-mentioned situations.
- Home buying - You may need to modify the coverage of your life insurance policy so that it can also cover your mortgage costs.
- Change of employment - A change in a job can change your lifestyle. So, you might also want to change your beneficiary as per your current situation.
- Income raise - You might want to afford a more expensive life insurance coverage with greater benefit.
- Marriage - You might want to change the policy so that you can change your beneficiary after marriage.
- Childbirth - You may choose to list your kids as beneficiaries.
- Divorce - You might want to remove your ex’s name as a beneficiary from the list.
- Retirement - Review the policies and decide if you want to continue the life insurance policy in future.
- Moving out - If your cost of living gets affected due to moving out of the state, you can talk to your insurance provider and make amendments to your policy.
What are your choices:
a You may remove your kids from the list
Your kids may do some silly stuff sometimes which can blow your head off! So, in this situation, you may decide to remove your kids' names from your life insurance policy. Instead of giving the money to your son/daughter, why not consider a church or an asylum?
If you want, you can support your grandchildren by including their names as your beneficiary instead of your son/daughter. You just need to call your insurance provider and ask them to add the name of your grand baby.
b You can adopt a pet
Many of us have pets in our house and we love them just as we love our family members. If you also have a pet like a dog, a cat, a goldfish, or a snake, you can list your pet as the beneficiary to your life insurance policy. In this case, you might have to create a trust to manage the money.
c You’re having a major medical emergency
Sometimes, things might get dizzy if you’re having any major surgical emergencies. It’s a good time to re-think about changes you need in your life insurance policy. If your current policy doesn’t cover the full amount of your surgery, you might want to increase the coverage further. In the future, you’ll be fully relaxed before going under any critical medical process.