If you own or are planning on setting up a life insurance policy you might have noticed there are a lot of requirements to be met before you can be accepted for the coverage.  You have to do blood test, answer question about your health and family history, but what about your beneficiaries.  This part is often overlooked, and in this article I am going to talk about why picking the proper beneficiaries is very important.

Who Should You Pick

Today, life insurance is a big necessity; not having it could cause a lot of financial pain.  The cost of things can be unbearable for your loved ones if they don’t have the proper funding to pay for expenses and funeral arrangements.  It’s also important that the money goes to the right people.  It doesn’t matter if its term life insurance for the elderly or a whole life policy for a young individual, having the proper beneficiaries is crucial.

Every life insurance contract has 2 beneficiaries; the first is the primary beneficiary.  This is the first person to receive the money from the life insurance contract.  For married couples this is a lot of times their spouse.  For non married people a lot of times it’s a parent.  The second beneficiary is called the contingent beneficiary; this person is second in line to receive the insurance payout.

So who is the right person to pick?  First off, if you put your parents as primary beneficiaries, be aware of the fact that when they get older you will want to change this especially if they are in bad health.  Instead, you may want to consider a brother or sister, or even a well trusted friend.  If this is the case let them know what you are planning to add them as a beneficiary this way it’s not a sudden surprise for them several years down the road.

As for the married couples situation, having your spouse as a primary beneficiary is OK, but make sure you consider a good contingent beneficiary.  A lot of times what happens are people pick someone at random not giving it much consideration, or worse they don’t pick anyone at all.  This situation becomes more important to you and your spouse as you get older so pick someone with trust.

Review Your Policy

Take time right now and review who you have picked as beneficiaries.  Your beneficiaries hold all the trump cards when it comes to your life insurance money and even though you may be gone, someone needs take care of the things you left behind.  Take time now and call your life insurance agent and see what would be right for your situation.