Aflac: How to Choose the Right Life Insurance Beneficiaries

When it comes to life insurance, choosing beneficiaries can be a daunting process. We all want the best for our loved ones, especially when we are planning for the end of our life, but it can be tricky to decide who exactly gets to benefit from a life insurance policy. These tips on how to choose a beneficiary may help you to whittle down your choices so that you can feel confident when it comes time to plan your insurance needs.

1. Don't designate minors

Life insurance policies are often toted as a means to support your dependents after you're gone. However, naming a minor as a beneficiary can make things complicated when it comes time to payout. Some companies may make a minor wait until they're 18 to cash out, which means much‐needed funds are not available until too late in many cases. Instead, put your money into a trust or distribute it exclusively to one party with instructions on how to divvy the funds from there. Also, keep in mind that some states also limit who exactly can be a beneficiary, so you'll want to check up on local laws before deciding.

2. Decide on a cause

In some instances, the best solution for choosing a beneficiary is not so much a dependent as it is a cause or reason. Whether it's that you don't have a dependent or you're looking to help cover your legacy, you might consider deeming a beneficiary who will exclusively manage the funds to cover monetary needs. For example, if you are living with a large amount of debt or have a hefty mortgage, funneling your funds toward those needs is a logical option to help relieve the stress of surviving loved ones. Thankfully, many life insurance companies will allow a person to choose multiple beneficiaries and purposes for the funds.

3. Consider who would benefit most

If you're unsure of who to designate as a beneficiary, take some time to consider who might need the funds. While spouses or children can make the most sense for many, others may not have those figures in their life, which means they'll need an alternative. Depending on life circumstances, a business partner, sibling, charity, or even a parent may make the most sense to deem as a beneficiary. At the end of the day, the policy is designed to benefit the person you choose within the scope of the policy, so be sure it fits your end‐of‐life wishes.

4. Avoid the drama

Family can be complicated. It's not unheard of for companies to argue over how a loved one's money is divided or spent upon their death. This can especially be troublesome when a person discovers that they are not receiving as much as they thought or that someone they didn't expect to receive a benefit is receiving one. In an effort to smooth all potential issues, you might choose to divide the benefit amount equally between all parties. For example, all kids would receive the same amount, regardless of their relationship or financials with the deceased.

Final thoughts

There is no singular way to choose the right beneficiaries for your life insurance policy. The most important thing to do is review all of your unique life circumstances and determine what is best for your family. Don't rush into a decision, and be sure to speak with the experts on what will help your loved ones the most.

The content herein is provided for general informational purposes and is not provided as tax, legal, health or financial advice for any person or for any specific situation. Employers, employees and other individuals should contact their own advisers about their situations. This article is for informational purposes only and is not a solicitation for insurance.

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