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Friday, November 20, 2009
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Life Insurance 101
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Call us at (800) 940-3002
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Beneficiary designations
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A beneficiary is a person or entity named to receive a portion of the death benefit
of a life insurance policy. The owner of a life insurance policy may name multiple
beneficiaries, and most insurance companies permit the policy owner to change beneficiaries.
There are two types of beneficiaries:
primary and contingent. A primary beneficiary has the first claim to the proceeds
of a life insurance policy should the insured die. There may be more than one primary
beneficiary and the proceeds do not have to be shared equally. The policy owner
of a life insurance contract may also name a contingent or secondary beneficiary.
The contingent beneficiary has claim to a portion of
the death proceeds should the primary beneficiary(s) be removed or die prior to
the death of the insured. There may also be more than one contingent beneficiary.
Many individuals designate a spouse as the primary beneficiary of their life insurance
policy and the children as contingent beneficiaries. You should consult with an
estate-planning attorney prior to making a minor child a beneficiary of a life insurance
policy. In addition, anyone contemplating making their estate the beneficiary of
their insurance policy should use extreme caution and consult with an estate planning
attorney prior to doing so.
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