What is a beneficiary?

Once an insurance policy is purchased a beneficiary has to be named. A beneficiary is the person or organization who will receive the payout of the life insurance policy upon one’s death. Since a life insurance policy extends over a period of years, deciding who to name as the beneficiary requires careful consideration. A secondary beneficiary may also be selected in the event the primary beneficiary can not be found after one has past away or in the event that an individual would want to split the payout of the policy between the two beneficiaries.

Those purchasing a life insurance policy more often than not choose a spouse to be the primary beneficiary. This is especially common when a couple has young children. The children can be named as well, but the husband or wife will be the one named to handle the money.

The policy holder can designate whomever as beneficiary and may also change the beneficiary later. Two important questions to ask when deciding whom to name as the beneficiary are: Who can I trust? Who has my family’s best interest at heart?

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