What is a Beneficiary?

 In Colorado Insurance Agency, Health Insurance

What is a Beneficiary?

If you do not know a lot about insurance, it can be frustrating to try to read through your own policy.  With a variety of terms that are mainly used in the insurance realm, it can be difficult to fully comprehend what your insurance policy is outlining. Learning the basics of life insurance lingo can be liberating and ensure that you are always aware of what is being discussed when it comes to your life insurance policy.

Beneficiary is an example of a term that can become very unclear within an insurance policy. The beneficiary of your life insurance policy is the individual that is entitled to the proceeds of your life insurance policy once you pass away. This may seem very clear cut, but there are situations in which this term can become confusing.

You can choose to identify your beneficiary as a specific person or you can identify your beneficiary as a specific class of people.  For example, you could name “Mary” as your beneficiary but you may want to identify “The children of (your name)” as your beneficiary. If you are naming a class of people, it is important that you are specific with whom this class includes and whom this class excludes.

A secondary beneficiary or a contingent beneficiary can also be identified. Your contingent beneficiary is the person that will acquire the proceeds of your life insurance should your primary beneficiary predecease you. This way, should your beneficiary pass away, your life insurance will still be distributed once you have passed away.

Should you have a change in your family situation after your policy has been written, it is important that you have your policy updated.  Feel free to contact us if you are unclear about the beneficiaries included in your life insurance policy.  We will gladly take the time to ensure your beneficiaries are up to date.

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