You purchased a life insurance policy to take care of the ones you love after you die. But what if that day were tomorrow? How can you be sure the benefits of your policy will wind up in the right hands? Naming a beneficiary is the first step in making sure your proceeds go exactly where you intended. Here are some important things to consider to be sure your beneficiary gets paid.
Name Someone as Your Beneficiary
First and foremost, you should name a beneficiary on your life insurance policy. You can have a primary beneficiary and a contingent, or secondary, beneficiary.
The primary beneficiary is the person or persons you name to receive the life insurance proceeds when you die. The contingent beneficiary, as you may have guessed, is the person or persons you name to receive the life insurance proceeds in the event the primary beneficiary passes away before, or at the same time, you do.
When you name your life insurance beneficiary, remember to:
- Be very specific as to whom your beneficiary or beneficiaries are and determine an amount—preferably a percentage—that each will receive from the policy.
- On a regular basis, review and maybe even revise your beneficiary choices, especially when circumstances change—like marriage, the birth of a child, divorce, a career change, an economic change, or the death of a beneficiary.
- Always speak with an attorney and/or a tax specialist to discuss what the consequences of your decisions will be.
Other Options in Naming Your Beneficiary
Typically, you will want to name a relative or close friend as the beneficiary on your life insurance policy, but there are other options.
You can name your estate as the beneficiary to help pay the taxes and other settlement costs of your estate, with any remaining money being distributed according to the terms of your will. If you don’t have a will, your state laws will dictate the distribution of your life insurance proceeds.
There is a disadvantage in naming an estate as your beneficiary, however. The life insurance proceeds may increase the amount of estate taxes that are payable. They may also be subject to probate attorney’s fees and creditor claims.
To avoid these costs, you can name a relative as the beneficiary and request that the proceeds first go to settling your estate.
You could also name a charitable organization that is not your employer as a beneficiary. You will need to indicate the name of the charitable organization along with a contact name, their tax identification number, and just as you would with a person, the percentage of the benefit that would be payable to them.
Another type of beneficiary could be an irrevocable life insurance trust. This option gives you more control over your insurance policy and the money that is paid from it. It also lets you reduce or even eliminate estate taxes, so more of your estate can go to your loved ones.
Contact True Blue Life Insurance at 1-866-816-2100 to discuss your options for naming a beneficiary on your life insurance policy.
Community Property State Consent
You should also be aware of something called a Community Property State Consent. This is for residents of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
If you are married and living in one of these community property states—and you name someone other than your spouse as your beneficiary—you may be required to have your spouse sign to waive his or her rights to any community property interest in the benefit.
What Happens If You Don’t Name a Beneficiary?
If you don’t name a beneficiary on your life insurance policy, the proceeds are usually paid to the aforementioned estate automatically—unless you indicate otherwise in the policy. Obviously, the best solution is to simply name a beneficiary.
Your Beneficiary: How They Claim Life Insurance Benefits
Insurance companies usually require that beneficiaries file claims, along with a certified copy of the death certificate, to receive the benefits from a life insurance policy. The insurance agency may have you fill out a claim form or additional forms reporting the death. In some cases, an insurance company adjustor may contact you with a few routine questions. This is merely a safeguard against insurance fraud and should not be considered out of the ordinary.
Many insurance companies will issue a payment between one and two months from the date of the claim.
Of course, sometimes the proceeds go unclaimed because policy documents were either lost or because beneficiaries didn’t even know a life insurance policy existed.
Often it’s best to leave stuff like this to industry experts.
State insurance regulators have been looking into the practices of large insurers and have urged them to proactively identify those policies that may be due for a payout.
The best way to avoid any potential problems with a life insurance payout is for you to discuss the policy with your beneficiaries. Oftentimes, an insurance agent will get a call from someone who thinks a deceased relative had a life insurance policy, but they are not certain and they don’t know how to find the policy.
In a New York Times article, Rosanne Placey, a spokeswoman for the Pennsylvania insurance commissioner, said:
“We always tell consumers to inform their beneficiaries of the policies. A policyholder should keep copies of a policy at an off-site location—such as in a safe deposit box, or with a lawyer or financial adviser—and make sure the beneficiaries know where the documents are kept and how to get access to them.”
True Blue Life Insurance Assurance
As a True Blue customer, you will have access to an online customer administration area where you will be guided through your entire application process. You can see the status of your life insurance policy as it goes through the approval process. You will know if and when it has been approved, if it is still waiting on signatures, etc.
When you have an active policy, you can simply download all the policy information, including the contact information for the insurance company you have selected. You can email your beneficiary the details of the policy and be certain they will be able to collect on it.
Contact True Blue Life Insurance at 1-866-816-2100 to discuss your options for not only naming a beneficiary, but also making sure that beneficiary is paid as you intended.
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My husband died from a glioblastoma of the hypothalamus just about 3 months after being accepted for a life insurance policy with Globe Life. Globe Life pulled his medications record and called him to discuss his history of illness in which my husband answered all of their questions truthfully. My husband was taking a pain pill, muscle relaxer and a station for elevated cholesterol . these medications were due to a failed back fusion, and of course, the hyperlipidemia. Knowing this, Globe Life issued him the policy after changing one question on his original application to a “yes” answer as opposed to a “no” answer and lowered his policy payout to $50,000.00 rather than $100,00.00. My husband died December8th, 2015 and I am still fighting Globe life to this day as they are claiming that the only reason why they issued him the policy in the first place was they trusted his word on his history of illness, even though (and they acknowledge this) he was never treated for any of the listed conditions on his PCP’S patient summary for every lab report, imaging, office visit etc… Globe Life claims that he was seen periodically for said conditions even though his doctor ordered tests for preventative reasons such as “A PSA TEST” for BPH”. My husband was never diagnosed or treated for (the at one time), 27 conditions listed on the patient summary.
I am a Medical Assistant and know how to read all records and an knowledgeable about doctor’s notes and patient summaries. I have also collected every record from my husband’s PCP that Globe Life based their decision on and have every one of his labs, imaging and reports being that my husband kept meticulous records along with his own notes. I have more records than his doctor and Globe Life, thanks to my husband being a land surveyor and an engineer, and very anal about documentation.
I am in the process of getting a complete and official explanation of the patient summary records that Globe Life based their decision on. It has taken quite some time for his doctor’s office to even respond to my inquiries, and now they are asking for an ex-parte to release any information to me when I already went through that to achieve his medical records from the beginning.
I believe that Globe Life is negligent in not paying out and dragging this on for 4 years. I have gotten extensions to pursue this. Please tell me what your opinion by law and experience is. His PCP’S credibility is grossly at best in question here as well.
Thank you for any help or advice that you can offer me.
Sincerely,
Shawn Hart
623 670 9874
Hi Shawn, Globe life insurance is well-know for this type of thing. Contact Steve C. Burgess Phone:888-428-4868 Email:[email protected] He has experience dealing with Globe and should be able to assist you.
Brian
Hi I have a couple of questions I’d like to ask for a friend, her mother passed away and lived in another state, and because she just had a baby, she is unable to travel to the state and see the policy for herself, only her brother has it, and he has said some questionable things I think, so I’m seeking clarification….
1. The brother said that her mother did not make enough payments before she died, that the policy does not pay in full…. I guess that sounds like a plausible requirement, but im not sure if that is typically how it works. Also my friend thinks her mother has been paying on the policy since the late 90s. She was over 70 yrs old when she died, and was in bad health for quite some time, so it seems unlikely that she would have canceled the first policy, started another, but didn’t have time to make enough payments. So it just doesn’t add up. Can you tell me what is typical, does one really have to make 20 +yrs of payments for a policy to pay out? it seems that requirement would defeat the purpose of having life insurance…
2. Does life insurance go to pay a person’s debts when they die, or does that only come out of the deceased person’s assets, such as cash, house, etc.?
Thanks
Hi ptsd!
I’m going to try to answer this as detailed as I possibly can with limited information and not seeing the actual policy in question.
Question #1:
There is a lot of moving pieces here. Without knowing the types of policies in question, it is hard to give absolutes. First, almost every life insurance policy is going to provide coverage at day 1 for the insured amount (there are exceptions called “graded benefits” but those are mainly on the guaranteed issue policies); however, if it is a permanent life policy like whole life or universal, it is entirely plausible that the missed premiums were paid out the cash value thus making the benefit amount less upon death. If it was a term policy, no such possibility because there is no cash value to pull from.
That being said, if you buy a life insurance policy today and die 3 months from now, you are going to be covered for that death (as long as it wasn’t an excluded activity like suicide, death from skydiving, or something along those lines) at the contracted amount. You do not need to make 20 years of payments to get the full death benefit. Any loans against the policy are deducted from the death benefit.
If the policy was a 20-year term life, things may be different. Since term is “temporary” life insurance, if the person has a 20-year term life policy and they outlive the policy without renewing it, the coverage is now null because the contract was for life insurance coverage for the 20 years in question.
Question #2:
No. The money goes to the listed beneficiary on the policy. Sometimes creditors are listed as the beneficiary, but in most cases, they are not. Debts are paid from the assets of the deceased (typically) and can vary from state to state. An attorney with experience in probate law would be a better resource for more in-depth questions.
I hope this helps a little.
-Luke
That check has been on hold for a month now. We have contacted life insurance companies Reguarding our fathers policy but cannot find the company, any help?
My father passed away but we have not found the policy or company. His new wife deposited a large check into her account but will not give his family any info. Any help?
Hi Joseph!
You can try this website to help locate life insurance policies:
https://eapps.naic.org/life-policy-locator/#/welcome
This should be able to assist to search for any life insurance policies that may be floating out there.
Hope this helps!
-Luke
Recently my wife and I have been trying to get our wills in order, just in case there is an emergency and we need to decide where our money will go. I was very grateful to learn about your tip to put some of your money towards your estate to pay it off! I want to make sure that my wife doesn’t have to worry about getting into mortgage debt if I pass away.
Where can I find benefits from death?thanks
Hi Patricia,
Are you in reference to where in the life insurance policy it states the death benefit?
-Luke