Life insurance is a way to leave money to your loved ones should you pass away. We call it putting your love into action because applying to provide financially for those you care about should something happen to you is one of the greatest acts of selflessness.
And while the concept of life insurance is simple, there is a lot of terminology that you’ll want to know the nuances of. One of the most commonly heard phrases in life insurance is “beneficiary.”
What is a beneficiary?
In life insurance terms, this is someone who will receive your claim money should you pass away unexpectedly during an active policy. This can be a person, such as a spouse, family member, or even a charitable organization. Most people make their beneficiaries someone who depends on them financially, who might benefit the most from the money, whether that be to pay day-to-day bills, cover a mortgage, or continue to sustain charitable donations.
Can I change my beneficiary?
Yes, you can change your beneficiary. You might want to change your beneficiary because you’ve recently gotten married, divorced, had a change in your estate planning, or any other reason you see fit. You can change your beneficiary with us at Ladder by simply going into your account and updating the name, versus the “old” way of having to send in paperwork to get it updated, which could take weeks.
Can my kids be my beneficiaries?
Your children can be your beneficiaries, but it might be wise to consult a lawyer or estate planner if your children are minors. Some financial experts advise against allowing your minor children to be the beneficiaries of a life insurance policy because the company cannot pay proceeds of a claim, should there be one, directly to minors.
Instead, it might go to a court-appointed guardian. The court-appointed guardian will have the legal authority to do what they see best with the money for your minor child, which might be at odds with your intentions. It could also take a while for the money to materialize due to the age of majority, which in most cases is 18 years old. That could result in a delay of payments for important needs like medical bills or education expenses that might occur before them turning 18. If you want your minor children to benefit from a claim, should one be paid, you should speak with a financial professional such as an estate planning and trust attorney, who will be able to advise you best.
Ready to move life insurance to the top of the list? Start by figuring out how much coverage you need with our easy online calculator.