Who should be my life insurance beneficiary?

Your life insurance beneficiary is the person or entity who receives the death benefit when you pass away. Choosing the right beneficiary is a crucial decision.

Common Beneficiary Choices

• Spouse or partner: Most common choice for married couples to ensure the surviving partner can maintain their lifestyle.
• Children: Either as primary beneficiaries or contingent (backup) beneficiaries. Minor children should receive benefits through a trust or guardian.
• Parents: If single with no children, parents often serve as beneficiaries to cover final expenses and provide financial support.
• Siblings or other family members: Appropriate if they depend on you financially.
• Trust: Provides control over how funds are distributed, especially for minor children or complex family situations.
• Charity or organization: Can be named as beneficiary if you want to leave a legacy.
• Business partner: Common in business situations to fund buy-sell agreements.

Best Practices for Naming Beneficiaries

• Name contingent beneficiaries: Always have a backup in case your primary beneficiary passes before you.
• Be specific: Use full legal names and relationship to avoid confusion.
• Consider percentages: If naming multiple beneficiaries, specify the percentage each receives.
• Avoid minors as direct beneficiaries: Set up a trust or name a guardian to manage funds until they're adults.
• Review regularly: Update beneficiaries after major life events (marriage, divorce, births, deaths).
• Don't name your estate: This can subject the proceeds to probate and creditors. Name individuals or a trust instead.

Most life insurance policies allow you to change beneficiaries at any time, so you can adjust as your life circumstances change.