Contingent Beneficiary Tips
Here are some tips to help you narrow down who you’d like to name as your contingent beneficiaries.
1. Don’t Select Children
If you have children, it would seem like a no brainer to list your kids. However, leaving life insurance to a minor can be a bit problematic. The reason is that anyone who receives a death benefit needs to be legally able to. Depending on the state, that can be anywhere from 18 to 21. If you must name a minor, a legal guardian needs to be appointed to accept the death benefit on the minor’s behalf until they reach the age of majority. Again, it’s possible but it can be a big headache.
2. Inform Your Beneficiaries
Make sure all your beneficiaries understand that you have them listed on your policy. This goes for both primary and contingent beneficiaries. You should also provide them the details of the policy and benefit.
3. Update Your Beneficiaries Accordingly
There are always changes in life. It’s a good idea to periodically update your beneficiaries if it is appropriate. Events such as a birth, death, divorce or marriage may require you to make necessary changes to your policy. You can change, remove and add beneficiaries as well as the payout percentages.