Introduction
A sound choice of beneficiary in your life insurance policy ensures that your family will be financially protected should the unforeseen happen. Here are seven tips that will surely guide you into making a sound choice, thanks to Wealth Arki and Ready To Be Rich YouTube channels.
Understand Who or What a Beneficiary Is
A beneficiary is a person, or a thing, who you choose to give the death benefit to, coming from your life insurance policy. So knowing their role and what your selecting these people will represent is crucial to their future. This has to be someone responsible and capable of managing the funds correctly. Wealth Arki states that it is important to be someone responsible and capable of managing the funds wisely.
Look at Your Family Structure
A commonly preferred choice is your spouse, children, or otherwise directly related family members. Think of who will be most profoundly affected, financially, by your death, and who you think will use the money wisely for the dependents’ better good, suggests Ready To Be Rich.
Name Multiple Beneficiaries
Consider naming several beneficiaries to avoid possible complications. Also, specify what percentage of the death benefit each of them should receive. This is most helpful if you want to provide for several people depending on you. Make the details of who gets what precisely defined in your policy to clear up any misunderstanding or dispute among the beneficiaries. That’s according to Wealth Arki.
Updating a Beneficiary
Life is always changing—whether it be marriage, divorce, the arrival of a new baby, or the death of a close relative—these will always be a reason to update your beneficiary designations. Allot a time to periodically review these information to make sure it always reflects your current intentions and circumstances. Ready To Be Rich says it’s best to make a yearly update of your beneficiaries or anytime a major life event occurs.
Consider the Financial Needs of the Beneficiaries
Estimate the financial requirements of your potential beneficiary. Consider their debts, current financial status, and their future needs such as education or healthcare. Wealth Arki recommends giving priority to those people whom, if you die, will be deeply affected in terms of financial losses. In this way, the death benefit would be truly allocated to those who will need it the most.
Think About the Age of the Beneficiary
In this case, if your age is the primary beneficiary, then the minor, you may want to make sure they can access the money responsibly. Designating a guardian or forming a trust to manage the money until the minor reaches adulthood is commonly practiced. Ready To Be Rich considers this legal planning in the event of minors to protect their interests and ensure that the money is truly used wisely and well.
Consult with a Financial Advisor
Selecting beneficiaries may be a tough job and demands making significant financial decisions at the same time. But one can take help from a financial advisor for wise suggestions. He/she will not only lead you in such a situation, relating to taxable and legal aspects but also pull you over from the entire process. Wealth Arki includes that professional advice will prove that the life insurance that you are purchasing correlates with your well-planned financial policy.
Conclusion
Choosing the right beneficiary for your life insurance is an important decision made by integrating different dimensions of your family, financial needs, and plans. Knowledge of the role of a beneficiary, designation of multiple beneficiaries, any regular information updating, consideration of the financial need, age of the beneficiary, and consultation with financial advisors, ensures that your insurance policy will work to its best merit for your dependents. However, using the insights of Wealth Arki and Ready To Be Rich, you will be able to make this critical decision easily into a confident and clear one.
References:
- 8 Things to Consider When Getting a Life Insurance (Article Link)
- Tips Kapag Bibili ng Life Insurance (Video Link)
- HMO vs. Life Insurance (Video Link)
- Usapang Life Insurance: Different Kinds of Life Insurance (Video Link)
- Insurance vs. Investments: Explaining the X-Curve Concept (Video Link)
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A multi-award-winning blogger and advocate for OFWs and investment literacy; recipient of the Mass Media Advocacy Award, Philippine Expat Blog Award, and Most Outstanding Balikbayan Award. Her first book, The Global Filipino Bloggers OFW Edition, was launched at the Philippine Embassy in Kuwait. A certified Registered Financial Planner of the Philippines specializing in the Stock Market. A recognized author of the National Book Development Board of the Philippines. Co-founder of Teachers Specialist Organization in Kuwait (TSOK) and Filipino Bloggers in Kuwait (FBK). An international member of writing and poetry. Published more than 10 books. Read more: About DiaryNiGracia
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