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Tips for Choosing a Life Insurance Beneficiary

Specifying who will receive the proceeds of your life insurance policy is an important decision.  Here are some tips to help you choose a beneficiary and avoid some common missteps.

  • Know your options. Generally, you can designate any one or more of the following examples as a beneficiary:

    • One person

    • Two or more people (and you decide how the benefit is split among them)

    • The trustee of a trust you've established

    • A non-profit or charity

    • Your estate

  • Avoid designating a minor. State regulations may limit if or how much a minor child can receive from life insurance proceeds, so the court may have to appoint a guardian to administer the funds. That can be a lengthy process, and one that typically requires multiple court dates. To avoid this, consider setting up a trust or designating an adult you trust to oversee the distribution of the money to the minor.  


  • Have a back-up. The primary beneficiary is who you select to receive the life insurance proceeds upon your death. However, if your primary beneficiary can’t be located, refuses the proceeds or is deceased at the time of your death, then a secondary (or contingent) beneficiary becomes the recipient. Make sure you follow the same advice for selecting a secondary beneficiary as you would for choosing the primary one.

  • Keep it up-to-date. One of the most common oversights with a life insurance policy is not keeping beneficiary designations up-to-date. Say you’re single and name your brother as the primary beneficiary, but later on you get married. If you didn’t update the beneficiary on your policy, then the proceeds will still go to your brother.


  • Be specific. In addition to keeping your beneficiaries current, remember to be specific when you name them. Be sure to list their full name and Social Security Number, or other identifying information, so there isn’t any confusion as to who you are designating.

  • Be consistent. Make sure your will matches your life insurance designation. If you update your will, take the time to update your life insurance beneficiaries (and vice versa). In the event your will and life insurance beneficiaries do not match, your life insurance designations generally will take precedence.

  • No beneficiary listed? If you neglect to designate any beneficiaries (or all of them predecease you), the life insurance proceeds will be paid to your estate. If that happens, the probate court will decide how to handle the funds. This could take a while and could involve multiple court dates. So, in order to eliminate any additional hurdles, be sure to clearly designate a beneficiary.


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