The choice of a beneficiary is flexible, as the insured can choose their spouse or partner, their children or someone else. (Photo: Pixabay)
In addition to being a requirement when purchasing a life insurance policy, naming a beneficiary is important because it provides financial protection for those you care about when you die or are affected. by one of life’s unfortunate circumstances, says Othneil Blagrove, Senior Manager, Sales, JN Life Insurance.
The JN Life senior executive explained that a life insurance policy can have more than one named beneficiary and that choosing this or these person(s) is an important step.
“A beneficiary is a person or entity who will receive all or part of the proceeds of an insurance policy if you die. You can name or designate one or more people, including a trust or your estate, as your beneficiary,” Blagrove explained.
“You can name up to five people as beneficiaries on your policy and you can change your beneficiaries at any time, once you have chosen the revocable option. The revocable option is the clause of the contract which authorizes you at any time to change beneficiary. If you had chosen the irrevocable option, you cannot change the beneficiary without the consent of all the beneficiaries,” he added.
The insurance manager explained that the choice of a beneficiary is flexible, as the insured can choose their spouse or partner, their children or someone else.
“You can also choose another family member, one or more business partners or the guardian you have chosen for your children. You can also name charities, businesses and other entities. If you have young children, another option is to create a trust fund or trustee and name that person or entity as the beneficiary,” he added.
Blagrove noted that naming a beneficiary also ensures that the insured’s family is not burdened with funeral or other expenses upon their death.
“One of the misconceptions about insurance is that a policy insures your life. However, it protects you or your loved one from the financial hardships you may face if you are affected by unfortunate events such as illness or death,” he said.
“If this happens, the life insurance payout, which is the financial benefit of a life insurance policy, could help cover a number of your life insurance beneficiary’s financial needs, including debt repayment and living expenses. It could also help provide the financial means to maintain the same lifestyle even when you are no longer around to help pay the bills. Giving extra financial security to your loved ones could be one of the best gifts you will leave behind, and that’s why naming a beneficiary is important because you’re giving them financial protection,” he added. .
Blagrove added that the policy can also be included in the will. However, unlike a will, an insurance policy cannot be challenged.
“The policy is a binding contract between the insurance company and the insurer,” he said. “Therefore, even if someone is upset about being excluded from the policy or is unhappy with the amount allocated, they will not be able to mount a successful legal challenge,” he said.
BLAGROVE… the revocable option is the clause of the contract which authorizes you at any time to change beneficiary