Beneficiary Insurance Life Policies

 A major issue in planning is who to name as beneficiaries on life insurance policies. The beneficiaries of a life insurance policy will generally receive the death benefit proceeds federal income tax free. A beneficiary is the one who receives the proceeds of a trust, retirement plan or life insurance policy. Most policies and plans will not directly transfer assets to minors until a trustee or a court approves a guardian. A trust may be a prudent beneficiary choice, if a surviving spouse cannot manage a large sum of money.

It is of utmost important to name secondary beneficiaries. If an individual dies without a valid will then that state's law specifies the order of legal beneficiaries to whom assets are distributed. Most of us tend to name minors as our beneficiaries when we buy a policy. For their sake, minors cannot receive or control proceeds.

In most jurisdictions, state law determines when children are entitled to receive the insurance proceeds. Remember, if you list descendants among your beneficiaries, you'll need to add new children or grandchildren when they're born. And divorce and remarriage should always spur a review of your policies and beneficiaries.

Even updating relatively minor points such as changing a daughter's last name after she marries should not be overlooked. Naming your estate the beneficiary of life insurance proceeds rather than naming specific individual beneficiaries is not the best option. It's smart to name contingent beneficiaries in case something were to happen to your primary beneficiary. If you name children, you may want to address whether their children should inherit proceeds if they're not living.

It is wise to consider a number of situations of your family when it comes to choosing beneficiaries. Moreover, it always better to consult your attorney or investment consultant for specific and unbiased advice.