Life Insurance – Who Is Eligible To Be The Beneficiary?

Life Insurance

A life insurance policy is taken out to provide a safe financial net for those who are dependent on you. However, there are a few regulations that are in place with who can be the beneficiary from the life insurance policy.

These can be:

Insurance policy

The spouse: it is always smarter to mention your better half by name rather than the word ‘wife’ or ‘husband’. This is because, in case of any early separation or divorce, these benefits could be transferred to your ex husband or wife. It is also recommended that the policy should be altered if in case divorce were to occur. 

car insurance policy

The children: life insurance policy should be amended after each child is born to include him/her in the list of beneficiaries. Adding your children in your life can cause you to leave out those children who are born after you make the policy. The choice of wording is also important. Minor children should not be included in the beneficiary list but instead should have a guardian to be made beneficiary till they reach the maturity age.




 

home insurance policy

Real estate: adding your property to the beneficiary list means you combine all your assets for the purpose of tax planning. This money however becomes a part of the estate and hence can be claimed by the creditors if need be.




 

health insurance policy

The creditor: sometimes insurance can help cover a creditor such as a mortgage or a loan related to business activity. There are numerous other ways that are better to handle this particular scenario, the creditor can be named a direct beneficiary of the policy.
 

life insurance policy

Testamentary trust: this seems to be an appropriate candidate for a beneficiary but the law is still hazy in some states over the matter of whether or not this leaves the proceeds from the estate out. It will help in credit shelter tax planning.