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Choosing a beneficiary for your life insurance

By Compuquotes Team on March 26th, 2008

When you're dealing with a life insurance policy, there are often a lot of unpleasant choices that need to be made. One of the worst of these can be choosing a beneficiary for your policy, since it isn't always easy to decide who should get the money that your life insurance pays out if you should pass away. While this can be quite a difficult thing to think about, it's a very important consideration because the first person who comes to mind might not always be the best choice as your beneficiary. In order to help you make this difficult decision, here are a few considerations that you should keep in mind.

  • Who would benefit most

One of the first things that you should think of is exactly who would get the most benefit our of your life insurance policy. This might be your spouse, or your children, or perhaps even a charity that you favor. Most policies will allow for multiple beneficiaries, so depending on the size of your policy you could possibly have several beneficiaries receiving a portion of your life insurance benefits. You still should take the time to weigh out the benefits and potential drawbacks of those you're considering as beneficiaries to make sure that your life insurance doesn't negatively affect them or leave out someone who would have been a better choice.

  • Expenses that would need to be paid

Funeral expenses and bills can leave a financial burden on your family, and your life insurance policy can be a great way to reduce that burden. Think of who would be best to put in charge of making sure that your bills are covered and that all of your funeral expenses are paid. You might want to talk to them in advance and see how comfortable they would be with the idea, and then make sure that sufficient funds to cover all of your expenses and debts would be left to them when your life insurance policy pays out.

  • Plans for the future

Don't forget any long-term plans that you might have had for the future, such as making sure that your children go to college or paying off a long-term mortgage that you and your spouse hold. If you should unexpectedly pass away, the payout from your life insurance policy could help to ensure that these plans can continue without you if necessary. You might choose to have a portion of the policy used to set up a college fund for your children, to provide a retirement fund for your spouse, or any other purpose which would make sure that those who you love have the money that they need when they need it.

  • See what's available

Be sure to talk about your options when you're shopping around for a life insurance policy. Your insurance agent might have additional suggestions for beneficiaries, and they can also tell you about any limitations that the policy you're considering might have. This will help you to be certain that the policy you choose can be used as you wish, and that you'll be able to pick the right beneficiaries so that the most use can be put to your life insurance

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