Requirements for Naming a Beneficiary for Life Insurance

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If you want to name a beneficiary for a life insurance policy, you're going to have to meet a few very specific requirements. Learn about requirements necessary for naming a beneficiary for life insurance policies with help from a certified financial planner in this free video clip.

Part of the Video Series: Insurance Basics
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Video Transcript

Hi, my name is Karen Lee. I'm the owner of Karen Lee and Associates and a certified financial planner and a registered representative at LPL Financial. Today we'd like to discuss the requirements for naming a beneficiary on your life insurance policies. First of all an owner may name beneficiaries as many as they want and whomever they want. Typically the beneficiary is named during the application process but we're going to talk about some real important details to remember when you choose those beneficiaries. One thing, the first thing I'd like to mention is if you have a will and your will designates where your money will go, your beneficiary designation on your life insurance is going to overrule anything your will says. So make sure you are cautious and specific when naming beneficiary designations. My second tip would be to use caution in naming your minor children. Many people will name their spouse as a primary beneficiary with their children as contingent beneficiaries in the event both they and their spouse die together. Insurance companies cannot pay out death benefits to minors so if you want to name your minor children, we recommend that you name a trust via a will and name the trust as the contingent beneficiary so your minor children can get use of those death benefits right away. Another caution is to go ahead and name specific names versus using classes of people. For example, instead of saying children of this marriage, list the specific names of the children that you want to leave money to. The more specific you can be with your beneficiary designations, the less problems down the road when something happens to you. My last tip is to review your beneficiary designations often. I'd like to see people reviewing them on an annual basis because things change in life. Changing beneficiaries on life insurance policies is an easy process and can be done enumerable number of times. All it requires is requesting a change of beneficiary form, fill it out, send it into your insurance company. So put on your annual to do list to make sure your beneficiary designations are in line with your wishes. So I hope we gave you some guidelines on naming beneficiaries on your life insurance. My name is Karen Lee. I'm a certified financial planner, the owner of Karen Lee and Associates and a registered representative with LPL Financial.


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