Life insurance isn't like the rest of your assets. Often, life insurance will be disbursed before your other assets have gone through probate. The purpose of life insurance is to make sure that your final expenses are covered, in addition to providing some financial stability for your family. Consequently, it's important to know where this money is going; it isn't going to follow the rest of probate. You control where your money is going by setting the beneficiaries.
You Can Change Beneficiaries At Any Time
The beneficiary of an account is the individual who is going to be paid out. You can change beneficiaries at any time by contacting your life insurance company and filling out the appropriate paperwork. Despite this, many people forget to change their insurance packages completely. This could be problematic, as an ex-spouse could get the life insurance payout or a now distant family member.
You Can Set Multiple Beneficiaries
You don't need to leave all of your life insurance policy to a single person. Instead, you can split it up by percentage to the beneficiaries you want the money to go to. This is common for those who have multiple children, or for those who may want to leave some money to their spouse and some money to their parents.
You Need to Set a Trust for Minors
For minors, a trust will need to be set up on their behalf for them to be a beneficiary. For this reason, most married couples leave each other as beneficiaries and then list their children only after they are 18. However, this is a dangerous gambit, as there are times when two parents could potentially pass on at the same time in an accident or during a natural disaster. In this event, the money could be difficult to disburse.
You Have to Tell Your Beneficiaries
How will your life insurance policy know when you've passed on? The answer is, they won't—until someone tells them. Your beneficiaries need to be aware of your policies and where they are held. A surprising number of individuals never talk about this with their family, so their life insurance policies might out in time to be useful during final arrangements. (In fact, it may only be discovered when the policy is later canceled for non-payment, which can lead to complications.)
Your insurance agent can give you more information about setting up your life insurance policy properly. All you need to know is how you would ideally like the money to be distributed. Contact Value Plus Insurance to find out more about your life insurance policy.