Is the Spouse the Usual Beneficiary for Life Insurance?


Before you die, you'll need to designate a beneficiary for your life insurance policy. This is one or more persons or an organization that you choose to receive the proceeds of your policy. You may change it at any time. If you leave no named beneficiary, the money will go to your estate.


There are two types of life insurance. Term life insurance is temporary. It provides low-cost life insurance to individuals who typically need it for 30 years or less. Permanent life insurance is a type of insurance that builds cash value over time, which can be used for any purpose. Permanent life insurance remains in force for as long as you pay premiums, until your death.


Premiums are paid to a life insurance company. In exchange, you receive a death benefit. That death benefit is payable to your beneficiaries when you die. When deciding upon a beneficiary, it is normal and customary to name your spouse.


One benefit of leaving money to your spouse is that the life insurance proceeds are income tax free. Naming your spouse as the beneficiary also keeps the death benefit out of your personal estate. When you die, the money will not pass through probate. Instead, it will be paid directly to your spouse.


If you and your spouse ever separate or get a divorce, you must remember to change the beneficiary to someone else. If you fail to change the beneficiary after a divorce, the money still will go to your ex-spouse, not your new spouse, if you have remarried.


While it is common for a spouse to be the beneficiary of a life insurance policy, it is not required. You may name a charity, your children or you can leave the money to your estate.

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  • "Life Insurance"; Kenneth Black, Jr., Harold D. Skipper, Jr.; 1994
  • "Practicing Financial Planning for Professionals (Practitioners' Edition), 10th Edition"; Sid Mittra, Anandi P. Sahu, Robert A Crane; 2007
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