Five Things to Remember While Choosing a Life Insurance Beneficiary

You need to name at least one primary beneficiary as per what the life insurance company may ask for. There can be a secondary beneficiary too. In fact, you can have multiple beneficiaries as well. In case the primary beneficiary is nor more at the time of your death, all the benefits from your life insurance will go to the secondary beneficiary.

The most important question you need to ask while choosing a beneficiary is: Who needs the money most on your death? For married people, spouse becomes an obvious choice. That way, your insurance money will replace the income you earned and help with extra or uncovered expenses. If you have children, the insurance policy should include enough money for providing any costs associated with their education or marriage.

There can also be the following circumstances when you can choose a different beneficiary:

• Married but wish to have a different beneficiary
• Unmarried and without any children
• Single or divorces with minor children

Not always will you have scenarios as above. Here are five things to keep in mind while choosing a life insurance beneficiary:

1. Always know what’s the purpose of your policy and have more options other than child and spouse. Be it your family or your company that you are insuring, your purpose of the policy has to be clear. For family insurance, it will be either the wife, children or parents. In a company’s insurance, it could be the business partner. You can designate either one or two people as beneficiaries, or a trustee of a body that you have established, a non-profit or charity or your own estate.
2. Keep the beneficiaries up-to-date. Say you wish to change your beneficiary once you are married, it is essential you update your life insurance provider about the same as otherwise the benefits will go to the person you had nominated before marriage.
3. Be specific of who should get the benefit on your death. You must name the person correctly as say you name  your beneficiaries as “my children” but when you die, one of the children too is no more, then it will not be clear as to who should get the beneficiary amount.
4. Don’t designate a minor as a beneficiary. It might lead to appointing of a guardian who in turn may benefit from the policy more than the minor.
5. Be aware of norms and do not disqualify unnecessarily any beneficiary from any policies. HDFC Life offers complete specialist guide to all your insurance-related queries. For details, visit https://www.hdfclife.com/

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