Even the best laid plans can be rearranged by life. The plan of life doesn’t always go according to plan. You probably bought insurance policies on both you and your spouse when you got married. Each of you designated the other as beneficiary to ensure that the survivor is taken care of regardless of whether the first person dies. This was at least the plan. Even the best laid plans can be altered by life. You have three more people in your family. Your partner becomes ill and dies. You make a claim on your life insurance policy and receive the death benefit. You try your best to stay a single parent or mother of three children and a widow. You continue to pay your premiums because you know now more than ever the importance of life insurance. Nevertheless, you overlook one essential element…updating your beneficiary designation. The proceeds of life insurance paid to beneficiaries are usually tax-free and available relatively quickly after death. The fact that you do not have a living beneficiary on your policy changes everything. If all beneficiaries listed die before you, the loss of life proceeds will be paid to your house. All proceeds from life insurance policies are now subject to probate, just like your other assets. Consult your tax and legal advisor about your specific circumstances. The proceeds could be subject to federal and state taxes. Any outstanding debts to collectors may also be deducted before your children can access any of the money. If your debts are high enough, your children may not receive anything. Probate is usually time-consuming and expensive. Your children are responsible for paying your final bills while waiting to receive any benefits that remain outside of your home. It is therefore vital to name a contingent beneficiary. A contingent beneficiary will receive the death benefit if the insured dies before the beneficiary. You can help your family members avoid additional stress by naming a contingent beneficiary on your life insurance policy. Your policy may list multiple beneficiaries, such as all three of your children. In the event of your death, the proceeds will be split equally amongst all three. You should be aware that proceeds from life insurance cannot be paid to minors. If any of your children are under 18 at the time of death, you may want to designate a guardian who will handle the money. While planning for your demise can be a difficult task, leaving your financial affairs in order is a thoughtful gift to your family. The Cincinnati Life Insurance Company nor any of its representatives or associates provide legal or tax advice. Consult your tax advisor or lawyer about your specific situation. Speak to an independent agent of The Cincinnati Life Insurance coverage Company for coverage service or additional information. Please refer to the contract for a complete statement of coverages and limitations. All candidates must be approved by underwriting. Most states allow access to merchandise and riders.
“Prepare for the Unexpected: Adding a Contingent Beneficiary to Your Life Insurance Policy
