Signing up for a life insurance policy is a smart move, regardless of how young or old you are. When you sign up for your policy, however, you will be asked to designate a beneficiary, who will be trusted with the money from the policy after you pass away. These are three possible beneficiaries that you can choose for your policy.
1. Individual Beneficiary
One common choice is to choose an individual beneficiary. Basically, this means that you can choose to leave the money to a spouse, an adult child or another person who is close to you. This allows you to provide your loved one with cash to handle your final expenses and often leaves your loved one with extra money after you pass away, too.
Another option is for your life insurance money to go into a trust. This is a good choice in a few situations -- if your children are not adults, a trust can be used to ensure that they are properly taken care of since the insurance company will not release the funds to a minor child. It's also a good option if you would like to divide the money among your family members, such as if you would like the money to go into multiple trust funds for multiple children and/or grandchildren. An attorney can help you set up a trust and can help you determine how the money will be allocated when you die, and he or she can also handle the division and disbursement of the funds after you pass away.
If you feel that your loved ones will not need the money from your life insurance policy when you pass away, if you don't have any close friends or family members or if you just want to leave behind a legacy when your life has ended, setting up your life insurance policy so that your money will go to a charitable organization of your choice can be a wonderful decision. It's a great way to continue giving back after you have passed away.
As you can see, you do have options for how your life insurance money will be handled. It's smart to consider all of your options carefully, to talk to a lawyer (such as one from Flaccus Law) about the best option for you and to check your will and beneficiary information often so that you can make adjustments based on your situation. For example, you may want to choose a trust as your beneficiary right now if your children are underage, but once they become adults, you might want to change your policy and choose a beneficiary rather than using a trust.