Life insurance, which can be either term or permanent, provides an essential safety net for your family in the event of your untimely death. However, it’s important to remember that life insurance isn’t just about financial protection—it’s also about helping the people you love stay connected with you after you’re gone. So before you choose your beneficiaries, keep in mind how each one could be affected by your passing and how each could make use of the money left behind by your life insurance policy.
Why You Need Life Insurance
One of life’s unspoken lessons is that everything can change in an instant. In a blink, your dreams, plans and future can disappear. One second you’re healthy, and then bam—you could be on your deathbed with no one to take care of you. Planning for those critical moments is what life insurance is all about. If you don’t have any dependents or anyone who would benefit from your death, there might not be much reason to buy a policy.
How to Choose a Life Insurance Policy
When it comes to choosing a life insurance policy, there are several factors to consider. One of these is who you should make your beneficiary. The term beneficiary refers to a person or entity that will receive money upon your death if you pass away with an outstanding life insurance policy in place. In other words, beneficiaries may be family members, friends, etc.
Selecting a Beneficiary
It’s an important step in protecting your family and preparing for your own death. It doesn’t have to be a difficult one though, so long as you take time to do it right. There are many factors that should be considered when selecting who will receive your life insurance benefits. We explain them all below.
Do I have enough life insurance coverage?
According to a report by GoBankingRates, 36 percent of Americans don’t have enough life insurance. That’s a huge percentage that isn’t protected. But what does it mean to have enough coverage? What is needed to properly protect your loved ones after you pass away? A lot of questions, and here are some answers.
Will my beneficiary need my money now or later?
If you have minor children, then your spouse or partner is most likely going to be your main beneficiary. However, if you have older children who are financially independent and don’t need money right away, it may make sense to designate them as a beneficiary on your life insurance policy instead of your spouse or partner. That way, they can take their time to figure out how best to use their inheritance—for example, for retirement savings.
What else can I do to protect my family financially if I die before them?
One of the most important things you can do for your family is to make sure they are financially secure in case anything happens to you. Providing for them is key but having a plan in place can help protect their well-being if anything were to happen to you. Asking yourself a few questions will help protect your family in case of an emergency, but no one knows what’s going to happen so it’s best to take action now!