You can get life insurance when you are young. In fact, the earlier you get it, the more you might save on your premiums. However, if you aren’t married, or don’t have children, you might wonder who will benefit from your policy? Who could be your beneficiary?
Life insurance isn’t insurance for married people with children. It can help almost any individual provide financial payouts to others in case of their death.
When Buying Life Insurance, Always Name a Beneficiary
If you buy life insurance for yourself, it is your own death that will cause the policy to pay its settlement. This death benefit will then go to the policy’s beneficiary. The beneficiary is the party that will receive the death benefit. As a result, that party will have a degree of freedom to use the funds provided. As a result, you will need to think carefully about who in your life will most benefit from the money provided by the death benefit.
Naming Family as Beneficiaries
In many cases, young, single individuals leave life insurance money to their parents or nearest relatives. This often helps these parties settle the estate of a deceased individual. If the beneficiary acquires debt on the insured’s death, such as credit card or student loan debt, then the death benefit can help cover these costs.
Non-family or Partner Beneficiaries
Even if you are not legally-married, that does not mean you cannot name a long-term partner as your beneficiary. Still, should the relationship eventually end, you will have to update your beneficiary.
Furthermore, if you plan to name an un-related executor of your estate in your Will, then you might benefit by naming the executor as the beneficiary. However, to ensure the executor uses the money appropriately, you might need to take a few extra steps to set rules on the policy.
If you want to have control over where your policy’s death benefit goes, then you have the option to name a trust account as the policy beneficiary.
The trust is a bank account that receives the death benefit. It contains specific rules on how the beneficiary can receive the money. The account will be managed by a trustee. This is a person who must ensure that the money goes to a purpose that you explicitly state. So, if you want your life insurance to go to a unique purpose, then you can state it when setting up the trust.
You have the right to update your life insurance beneficiary as your needs in life change. If you get married, have kids and want to leave your policy to them, then you do have a right to update your policy. All you will need to do is to update the policy.