Naming Your Beneficiaries on Your Life Insurance Policy
A policyholder is a person named in a policy. If you have an insurance agreement or policy, you’re a policyholder and technically known as the policyholder. You might own a policy that names someone else as your insured, but you are still a policyholder. So technically, you’re insured even if the person named on the policy is not you or the person you called on the policy. The only difference is that you should have read the agreement or policy well enough that you understand the difference between being insured and being a policyholder.
Some policies have an optional policy rider. A policy rider is an additional feature that you can add to your policy at any time. It’s designed to supplement or make more affordable a specific part of your coverage. The most common optional policy rider is the death benefit. With a death benefit, your family will get the death benefit if you die. This is a great way to save money when you have a Life Insurance Policy with a term commitment.
Some other optional policy riders are replacement cost and accelerated payment. With a replacement cost rider, your life insurance policy pays out the exact amount no matter what age you die. With an accelerated payment, the insurance company pays your beneficiaries an amount equal to the difference in your premium and the current market value of your policy within a certain period. The beneficiary doesn’t need to know that you’re alive with either rider if you decide not to payout the death benefit.
Another type of optional policy rider is the terminal illness rider. Terminal illness means that you don’t need to make payments on your policy. If you become ill and unable to work, you don’t have to worry about making your scheduled premiums. Instead, your beneficiaries will be given extra financial support until they find employment and can pay the outstanding balance of your life insurance policy.
One more optional policy rider lets you skip making premiums payments until your policy dies. The term “term” means a specified period of time. If you decide to skip making premiums payments during this period, your policy will be canceled and the insurance company won’t pay out. However, it’s important to note that the insurance company will still honor your claim if your policyholder becomes deceased during the specified term. In addition, the insurance contract doesn’t necessarily need to specify the cause of your policyholder’s death. It could be accidental or suicide.
A final optional rider that lets you skip making premiums payments for your policy is a guaranteed issue rider. A guaranteed issue means that your policy will automatically be added to your beneficiaries’ accounts as long as your policyholder hasn’t died. This ensures that you’ll always have enough funds to pay your expenses after your policyholder passes away. However, keep in mind that if you don’t have sufficient funds in your beneficiaries’ accounts when your policyholder dies, then your policy will be immediately terminated.
As mentioned earlier, with many life insurance policies you can specify several different beneficiaries. However, some policies only allow you to designate one primary beneficiary. If you’re unsure what type of beneficiary you should choose, you should always list everyone on your policy. This is the same as naming several people as co-owners of your business or estate. The benefit of doing so is that you’ll always know exactly who your beneficiaries are and how much money they’ll receive upon your policyholder’s death.
As you can see, there are several different ways to name your beneficiaries on your life insurance policy. You need to consider the needs of your beneficiary and your policyholder when naming a beneficiary. You also need to keep your insurance policy in good standing and updated in order to ensure the best interests of your family, while also providing financial protection for your beneficiary. After you’ve named a beneficiary and reviewed your policy documents, make sure to keep good records of all medical and funeral expenses and you should be good to go! Remember that your named beneficiary is the person who will receive whatever your policyholder has already paid.