Although often thought of as distinct from your overall estate planning, a life insurance policy probably factors into the big picture. Leaving behind assets directly or through tools such as a trust is optional and beneficial for you when you already own those assets. But what if you do not have enough assets set aside or those that could be easily liquidated to help support your loved ones in the immediate aftermath of losing you? A life insurance policy can help to close the gap.
Your beneficiary is the person, entity, or people who will be eligible to receive the proceeds from your life insurance policy benefit. You should think carefully about the debts and other expenses you would like them to be able to cover when selecting a face amount on the policy and also in choosing who will be your primary and contingent beneficiary. Practically anyone can be a life insurance beneficiary, including organizations, people, and trusts.
Some of the most common examples of life insurance beneficiaries include:
- Legal entities like your business
- Charitable organizations
- Your estate
- Your trust
- Multiple individuals, such as a spouse and children
- One person, such as a spouse.
Some insurance companies will put limits on how many beneficiaries you are eligible to limit. Make sure that you think about this when choosing the right company to work with.
Your primary life insurance beneficiaries are those who are first in line to receive the policy proceeds if you pass away, whereas contingent or secondary beneficiaries get the death benefit if the primary beneficiary dies before you do. Set aside a time to speak with an experienced estate planning lawyer in Pasadena to learn more about these planning options and how life insurance works with your bigger estate strategy.