Term life insurance is a type of insurance policy that provides financial protection for a specific period of time. You can easily calculate the coverage you need with financial tools such as a term life insurance calculator.
If you pass during the policy term, term life insurance is designed to pay out a lump sum of money to your beneficiaries.
The beneficiaries you choose will receive the death benefit payout, which can cover any outstanding debts, funeral expenses or provide ongoing financial support for loved ones.
Who can be a beneficiary for term life insurance?
The answer is simple: anyone you choose. However, it is important to carefully consider who you want to designate as your beneficiaries, as this decision can significantly impact the people you care about most.
Here are some examples of beneficiaries that people commonly choose for their term life insurance policies:
- Your spouse or partner: If you are married or have a long-term partner, you might name them your primary beneficiary. This can help ensure that they are financially supported in the event of your death.
- Your children: If you have children, you may name them as your beneficiaries to provide financial support for their education or other needs and help cover any outstanding debts or expenses.
- A charity: If you have a cause or organization you are passionate about, you could choose them to help ensure that your legacy lives on through your charity support.
- A business partner: If you own a business with a partner, you might want to name them your beneficiary. Hence, your partner has the financial resources to continue running the business after your death.
What to consider when choosing a beneficiary
Choosing a beneficiary for life insurance is an important decision that requires careful consideration. Here are some factors to consider:
- Your relationship with the beneficiary: The first thing to consider is your relationship with the person you’re considering. Make sure you choose someone you trust and who will use the money for its intended purpose.
- Age and health of the beneficiary: If you choose a beneficiary who is young or in good health, they may not need as much of the payout as someone who is older or has health issues. In these cases, consider naming multiple beneficiaries or setting up a trust to ensure the funds are used appropriately.
- Financial situation of the beneficiary: If the person you are considering is financially stable, they may not need the payout as much as someone struggling financially.
- Tax implications: Remember that life insurance payouts may be subject to taxes. If you are naming a beneficiary who is not your spouse, there may be tax implications. It is important to consult with a financial advisor or tax professional to understand the tax implications of your choices.
- Estate planning: Consider how the life insurance payout will fit into your overall estate planning. If you have a large estate, you can set up a trust to manage the payout and ensure it is used appropriately.
You can also name secondary or contingent beneficiaries if your primary beneficiary predeceases you or cannot receive the death benefit payout for any reason. It is very important to regularly review and update your beneficiaries as your circumstances change. For example, if you get divorced or have a new child, you may need to update your beneficiaries to reflect these changes.
You choose anyone you want to be a beneficiary for your term life insurance policy. However, it is important to carefully consider who you want to designate as your beneficiaries and regularly review and update your beneficiaries as your circumstances change. By doing so, you can help ensure that your loved ones are financially supported in the event of your death.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Term Life (B60000 series) In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60200, ICC18B60300, & ICC18B60400. These policies are not available in DE, OR, or NY. Group Term Life (Q60000 series) In Delaware, Policies Q60200C. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C These policies are not available in NY, PA, or VA. Coverage may not be available in all states. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions. For complete details, including availability and costs, please contact your local Aflac agent.
Aflac insurance coverage is underwritten by Aflac. In New York, coverage underwritten by Aflac New York.
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