Making decisions regarding your life insurance policy will be one of the most important things that you can do for your loved ones. One of the most crucial parts of life insurance planning is choosing a beneficiary. The beneficiary is the individual that will receive the benefits once you pass away.

Many people choose only one person listed as a beneficiary on life insurance policies. However, it is important to think about adding a second, also known as a contingent beneficiary to your policy. A contingent beneficiary can be an asset in making certain that your wishes are carried out after you are gone.

The following is some information about contingent beneficiaries and why you should consider listing one to your life insurance plan:

The first question you may have is what is a contingent beneficiary and why is it advisable to have one. A contingent beneficiary is a person that you add to your insurance policy that will receive your life insurance benefits if your primary beneficiary is unable to do so.

For instance, if you and your primary beneficiary are traveling in a vehicle together and you are both killed in a car crash, there is no beneficiary and the money will go into your estate. It will then be dispersed to your next of kin. You then lose the ability to have a say in where your money goes after death.

A contingent beneficiary on your insurance policy lessens the risk of your life insurance benefits going into the estate. He or she will step in if your primary beneficiary passes away before you or at the same time.

Listing a contingent beneficiary prevents long legal proceedings to determine where your insurance money will go. If you have no continent beneficiary and the primary beneficiary is no longer living, it goes into your estate and is dealt with through the legal system.

Not only does this take away your ability to determine who will get your insurance payout, but it also enters the money into a long and drawn out legal process that will ultimately cost even more money to finalize.

Having a contingency beneficiary on your insurance policy also ensures that all of your children are cared for. Although most people list a spouse as a primary beneficiary, you may wish to have your life insurance go to your children. It is not the best idea to list a minor child as your contingent beneficiary, as that can cause some legal issues that will have to be handled in court.

Instead, you can list a contingent beneficiary that you also name in your will to be the caretaker of your children should you pass away. The contingent beneficiary will then go to that person who will be in charge of dispersing it once the children reach adulthood or at the age you designate.

Another benefit is the fact that adding a contingency beneficiary does not increase your insurance payments. It is free to add one or more contingency beneficiaries so that your benefits will be handled based on your wishes. You can also make changes to your list of contingent beneficiaries whenever you like should you change your mind.

Also, remember that you do not have to leave your life insurance payout to just one person. You can opt to have more than one primary beneficiary, or you can have dual contingency beneficiaries. Then you can designate who gets what portion of your death benefit.

For more assistance with adding contingent beneficiaries to your insurance policy, please contact Habersham Funding LLC for additional information.