Why Beneficiaries Matter in Term Life Insurance
When you buy a term life insurance policy, one of the most important decisions you’ll make is who will receive the payout if something happens to you. This person is called your beneficiary. While it sounds straightforward, there are a few crucial considerations that can make a big difference for your loved ones.
Who Can You Name as a Beneficiary?
You can name almost anyone you choose — a spouse, child, parent, friend, or even a trust or charity. Some people choose one beneficiary, while others select multiple people to split the proceeds. If you have young children, it’s usually smart to name a trusted adult or set up a trust, since minors can’t directly receive life insurance funds.
- Primary beneficiary: The first in line to receive the payout.
- Contingent beneficiary: The backup, who receives the benefit if the primary beneficiary has passed away.
Tips for Choosing and Updating Beneficiaries
Life changes — and so should your beneficiary choices. Marriage, divorce, new children, or even a change in your relationship with someone could mean it’s time to update your policy. Forgetting to review your beneficiaries can cause confusion or even legal issues later on.
For more guidance, visit our resource center for tips on managing your policy. And if you’re shopping for coverage, check out our easy guide to getting started with term life insurance.