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A few tips on naming life insurance beneficiariesWhether proceeds from your life insurance policies will someday amount to $5,000 or millions, you want to be absolutely certain the money ends up in the right hands.First rule: In general, you should name specific people as beneficiaries rather than having proceeds go to your estate. This way, your family receives the proceeds quickly. If life insurance is paid to your estate, the money must find its way through the legal system along with the rest of your assets—which can result in a long wait for those people you intended to receive the proceeds. Second rule: Always name one or more "contingent" or secondary beneficiaries, in case you outlive your first beneficiary. (Sure, you can easily change beneficiaries at any time. But you have to remember to do it.) And remember, if you update the beneficiaries named in your will, the beneficiaries of your life insurance policy haven’t been updated, too, unless your insurance agent and company have been notified. Third rule: Be unmistakably clear when naming beneficiaries. Simply naming "my spouse" or "my children" could delay payment (for years!) or even cause the money to go to the wrong person. Similarly, you should keep your beneficiaries up-to-date. "Diane, wife of the insured" may create a problem if, at the time of your death, you’re married to "Cheryl" or no one. Even designating "children of the insured" may result in confusion and messy lawsuits. Do you mean to include your spouse’s children from a previous marriage? Adopted children? Be clear! Be precise about how proceeds should be distributed, too. If one of your children dies before you, do you want some of the proceeds to go to his or her children? Perhaps they’ll need a bigger share due to hardship? It’s important to consult with both your insurance agent and your legal adviser when planning the future distribution of your assets. With forethought plus helpful advice from these professionals, it’s possible to envision and provide for almost any set of circumstances. It’s your money. Make sure it goes where you intend.
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