by Donn J. Sinclair – Charlotte NC – April 5, 2018
You select beneficiaries to receive the insurance proceeds of your term life insurance policy should you die during the term period. Normally you designate beneficiaries on your insurance application, and you also normally retain the right to update that designation as you desire. Designating and keeping current your term life insurance beneficiary designations provides you the final say in whom receives your insurance proceeds. Please note that your insurance carrier and state may have limitations on your beneficiary designations with special considerations for spouses and minors.
Choosing your term life insurance beneficiaries is a very personal decision that provides for and protects your loved ones in the event of your death. Will your family need the proceeds to cover the monthly mortgage payments; and other ongoing bills that must still be made even without your ongoing income ? If you and your spouse will or are collecting Social Security, then might that be lost future income the surviving spouse might need ? Might there be extra final expenses and unpaid medical bills ? These are just several personal questions to keep in mind when choosing your term life insurance beneficiaries.
You may also designate beneficiaries as part of a financial transaction; such as, covering risks for surviving business partners in the event of a partners’ death. Also covering a business loan in the event of your death.
Regardless of whether for personal or business reasons you designate beneficiaries; you may designate one, two, or more people as those beneficiaries. You may also establish and designate a trust as your beneficiary. The named trustees will administer the proceeds as instructed by the trust. Plus you may name charities, and or your estate as beneficiaries of your term life insurance policy.
Next you should consider whom should be your primary, secondary, or successive beneficiaries. Primary beneficiaries are the first in line to receive your term life insurance beneficial proceeds. Should one more of your primary beneficiaries predecease you, then secondary or contingent beneficiaries would be next in line to receive the insurance proceeds. Should your designated primary and secondary beneficiaries predecease you, then your successive or tertiary beneficiaries may be in line to receive your term life insurance proceeds.
Several final items to keep in mind that there may be state insurance and or insurance carrier restrictions on your beneficiary designations. Review and update if necessary your term life insurance beneficiary designations. You may be required to have your spouse sign a waiver if your spouse is not named as a or the primary beneficiary. Also you might want to name a final beneficiary for you insurance proceeds. While one cannot foresee all future outcomes, some thoughtful planning will help insure that your term life insurance proceeds are received in the amount and by those you intended.
Donn J. Sinclair, MBA (803)329-0609
Charlotte NC, Rock Hill SC, and Charleston SC
April 5, 2018
Donn J. Sinclair, MBA is SC insurance licensed in CT, GA, IL, NC, SC, and VA (NIPR #125783). SC Real Estate License #76530, and NRDS #554027312.. @Sinclair Financial Solutions is independently owned and operated. Securities offered through Fortune Financial Services, Inc, Member FINRA/SIPC.