Category Archives: Personal Finance

How to Choose a Life Insurance Beneficiary

Naming a life insurance beneficiary sounds like a pretty straightforward process. Simply pick one or a few of your dependent loved ones and that’s that, right?

Well, not exactly. In the event of your death, you certainly want your benefits to go to the people you care about the most, but there are also plenty of other factors to consider. Here are 5 tips on how to go about selecting the right beneficiaries for your life insurance policy:


Your children are obviously at or near the top of your list of potential beneficiaries, but if they are underage when your policy goes into effect, they could have some trouble collecting their benefits.

Because insurance companies cannot pay benefits directly to minors, you are going to want to set up a trust, or appoint a guardian to watch over the money for them until they are of age to handle it themselves. You can name your children as your life insurance policy beneficiaries and also name an adult custodian under your state’s Uniform Transfers to Minors Act (UTMA). If you want the proceeds to go to more than one child, you’ll need to specify the percentage each receives. Otherwise the court will have to appoint a guardian for them, which can be a complicated and expensive process that could end up eating into their benefits and causing unnecessary added grief.


You don’t want your life insurance policy to go to waste. That’s why it is important to consider the spending habits of those you name on your policy. If one of your desired beneficiaries is notoriously irresponsible with their money (e.g. they have a gambling problem, they are still too young to handle large sums of money, etc.), you might want to consider putting their money into a trust, or appointing someone else to manage it for them with explicit instructions on how the money should be handled and released.


In some cases, receiving life insurance benefits can actually negatively impact a beneficiary’s financial situation. For instance, if your beneficiary is disabled or receiving government benefits of some sort, receiving a large life insurance payout could bump them out of the income bracket that allows them to qualify for their much needed benefits, leaving them worse off than they were before they received your life insurance money. You’ll want to keep this in mind when selecting your beneficiary.


All too often, people make the mistake of only naming a single primary beneficiary. Of course you want your spouse to receive benefits in the event of your death, but what happens if he/she passes away before you and you fail to name a contingent beneficiary on your policy?

When this happens, the money automatically goes into the estate where it is subject to probate. This means that your beneficiaries might have to wait for significant amounts of time to get their benefits.


If you have a life insurance policy, but for one reason or another you don’t feel comfortable leaving it to any individuals in particular, you can opt to put it all into a trust, or dictate that it be used to pay off business debts. Another popular option is to leave it to a charity of your choosing. If your family is already taken care of financially, a charity is a great way to see that your money is put to good use.

If you’re still unsure about who to select, talk to your insurance agent and review your options today. Regardless of who you decide to name in your policy, it is absolutely crucial that you let them know about it. If you pass away and they have no idea they have a payout coming their way, they might not go looking for it. Insurance companies usually don’t spend a lot of time tracking down your beneficiaries for you. So once you make someone a beneficiary, make sure they know that they’re on your policy and which insurance company to look for in the event of your death.

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Life Insurance for Stay at Home Moms

“Are you working?” I asked the young mother of two whose husband was purchasing a life insurance policy for himself. She answered, “no, I’m a stay at home Mom.” The husband told me they had thought of purchasing a policy for her, but since life insurance is “income replacement,” they would wait until she went back to work before they would consider a policy for her.

I bluntly asked him, “if your wife were to pass away, what would it cost to replace her “services?” After looking at me with a “I can’t believe you asked that question look”, they started looking at how much it would cost to get a full-time child-care provider, a housekeeper (who cooks), a driver to drive the children to school (when they started) and doctor appointments, etc., etc. I told them the replacement cost of the average contribution a wife makes at home is worth about $45,000 a year (based on a recent survey done by Penn Mutual Insurance Company).

Was that amount worth protecting for them? After looking at that number, they decided to purchase a 20 year term life insurance policy with a death benefit of $500,000. As she was young (27) and healthy, that policy would only cost them about $19 a month. Where else can you purchase peace of mind for less than $20 a month?

Stay at home moms – if you would like to see life insurance quotes for you, click the Start Your Instant Quote button now.

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Real-life impact: The story of Jim Bix

Jim Bix was a young, recently married electronics technician when the unthinkable happened: He was diagnosed with incurable lung disease. As his health began to deteriorate from the illness, Jim needed to turn to disability insurance to pay for the daily living expenses of his wife Clara and two daughters.

Clara recounted this struggle in a feature story for the Life and Health Insurance Foundation for Education (LIFE), a nonprofit that aims to help consumers make smart insurance decisions.

But, while she says the initial news was bad, Jim’s health stabilized over the next 20 years. During this time, Clara says Jim kept his family in their home and his daughters enrolled in a great private school.

Jim’s good fortune, however, wasn’t destined to last. Just when his health took a turn for the worse, the family received more bad news. Clara would need surgery to remove a cancerous kidney tumor.

After her successful operation and a brief spell of happiness for the family, Jim succumbed to his illness. But, while the family may have fallen on hard times, smart decisions made by Jim helped keep the family afloat through these difficult circumstances. Jim had paid extra to double his coverage amount, and as a result, despite his untimely demise, the Bixes were able to enjoy the same lifestyle they had before his passing.

“Life insurance was the greatest gift my dad could give us,” says Brittany. “It has allowed us to live life the same way as when he was here with us.”

According to the source, Brittany was so thankful for what insurance was able to provide for her family that she is now planning to pursue a career as a licensed insurance agent, hoping to pass on the gift of financial security to more families dealing with difficult situations like those her family faced.

As this story illustrates, losing a loved one is always difficult, but it can be easier financially if you take the right steps for your family. For online life insurance quotes that can help you begin planning for the future, visit today.

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