How Can Setting Up Life Insurance Beneficiaries Help Your Loved Ones?

As a business owner, protecting what you’ve built and ensuring your loved ones are secure is important to plan for. Life insurance is often a key part of that plan, and this includes deciding who your beneficiaries will be. These are the people who receive the death benefit, typically tax-free and according to your wishes, often without needing to go through probate.

Understanding Beneficiaries

Many beneficiaries are revocable, meaning the policy owner can change them later without permission. On the other hand, irrevocable beneficiaries require consent to be changed. A policy can have multiple beneficiaries who may share the proceeds according to the terms of the contract. You can name primary beneficiaries, who receive the death benefit first, and contingent beneficiaries, who only receive it if all primary ones are no longer living.

Once you’ve chosen your beneficiaries, it’s important to keep a few things in mind. Remember to:

• Update beneficiaries after life changes, like marriage, divorce, or death.
• Name a contingent beneficiary in case your primary beneficiary passes away.
• Avoid naming your estate as a beneficiary, which does not bypass probate.
• List full legal names, especially in blended families.
• Avoid disqualifying a special needs individual from government benefits.

Life insurance is about providing protection and peace of mind. Talk to your Federated^® marketing representative for a referral to a member of Federated’s network of independent attorneys to learn more.

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This article is for general information and risk prevention only and should not be considered an offer of insurance or legal, financial, tax, or other expert advice. The recommendations herein may help reduce, but are not guaranteed to eliminate, any or all losses. The information herein may be subject to, and is not a substitute for, any laws or regulations that may apply. This information is current as of its publication date and is subject to change. Some of the services referenced herein are provided by third parties wholly independent of Federated. Federated provides access to these services with the understanding that neither Federated nor its employees provide legal or other expert advice. All products and services not available in all states. Qualified counsel should be sought with questions specific to your circumstances. All rights reserved.