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How to Name your Life Insurance Beneficiary

Dec 06 2010

One of the things that you will have to do when you get life insurance is to name your beneficiary. This is the person that will receive the benefits of your life insurance policy if you are to pass away. This seems like a fairly easy thing to do since most people know that they want their spouse or children to receive benefits if they die. However, choosing the beneficiary is not the same as officially naming the beneficiary. Doing this is also fairly easy but it requires that you understand a few things.

Revocable vs. irrevocable beneficiaries 

First, you need to understand that there are two core types of different beneficiaries and you want to choose the right type for you. Those two types are:

  • Revocable beneficiaries. You can name them now but change this at any time that you want to in the future.
  • Irrevocable beneficiaries. Once you have named these, you can’t change them unless the person that you’ve named gives legal permission for you to make the change.

Most people will choose a revocable beneficiary because of the flexibility that it offers. There come times in life when you may want to change your life insurance beneficiary (such as when you get married, when you have children and when your spouse dies). However, in some cases, as with divorce settlements and prenuptial agreements, it is sometimes required or better to choose an irrevocable beneficiary.

More than one beneficiary 

You do not have to name one single person to be your beneficiary. In fact, most people name more than one beneficiary. There are two common ways that this can be done:

  • Multiple beneficiaries. This means that you name more than one person to receive your benefits upon your death. For example, if you have three children then you may say that each of them gets some of the death benefits when you pass away. When naming multiple beneficiaries, you should select the percentage amount that each individual named should get. For example, you may want each child to receive one third of the payouts or you may want your oldest child to receive fifty percent and the other two to receive twenty five percent each. Name this now to prevent problems between them later.
  • Primary and secondary beneficiaries. Another way that you can name more than one beneficiary is to name a primary and then a secondary beneficiary. The difference is that all of the payouts go to the primary beneficiary unless that person also dies and then it all goes to the second beneficiary. For example, your primary beneficiary may be your spouse and your secondary beneficiary your child so if you and your spouse die together in an accident then your benefits immediately pass to your child.

There are very few limitations on how many beneficiaries you can name. For example, you could name ten beneficiaries at once when naming multiple beneficiaries and you could also name a primary, a secondary and a tertiary beneficiary.

Beneficiaries who are not individuals 

Most people who buy personal life insurance name individuals (such as a spouse or a child) as their beneficiaries. However, there are other options as well including:

  • Your estate. If you have a will that dictates what to do with your entire estate then you may make the estate your beneficiary and the benefits will go to the estate to be doled out as outlined in your will.
  • A legal firm. You may name a legal firm as your beneficiary for the express purpose of paying out your alimony or child support payments or taking care of an elderly parent for you if you die first.
  • A creditor. Believe it or not some people name as their beneficiary someone that they owe money to. Sometimes this is done as part of a transaction to secure the original loan.

There are pros and cons to all of these options, which should be reviewed carefully before deciding to go this route.

The process of naming a beneficiary 

The actual process of naming your beneficiary is very simple. When you get life insurance, you will receive an official form for doing this from your life insurance company. You simply complete the form following its instructions. If you have named a revocable beneficiary and want to change it then you should request a new form from the life insurance company to change the beneficiary. Note that you should not change the beneficiary in your will without filing an official form with the life insurance company because the will won’t supersede the life insurance forms.


Joe Keefe is the managing editor at Freeinsurancequotes.org, a site that provides insurance quotes across the country.

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