People take out life cover because they want to protect a particular beneficiary or beneficiaries from suffering a financial loss when they’re no longer able to provide for them.
This is usually a spouse or a child, who relies on the policyholder to pay their bills and keep food on the table. But families and businesses are complicated, and, if you have numerous dependents, it may be difficult to identify your primary beneficiary, and to know what options are available to you.
1. You have numerous options – not just one
Life cover does not limit you to a single beneficiary. You can split your pay-out between numerous loved ones, all of whom will receive a share of the total sum.
You can also allocate a trustee if you’d like to make your underage child a beneficiary. Your chosen trustee will ensure your child receives the investment at the right time. If you co-own a business, you can select your business partner as a beneficiary – since they will also suffer a financial loss if you pass away.
It is important to understand that you can select more than one person as a beneficiary, that they don’t have to be adults yet, and that you can choose people outside your family.
2. Don’t forget your Plan B
If your spouse is your primary beneficiary, but they pass away in the same incident as you, then the lump sum will be given to your secondary beneficiary.
It is important to select this person wisely, to make sure your remaining loved ones will be provided for.
For example, if you select your financially independent sibling as your secondary beneficiary, your parents-in-law, who may be financially dependent on you, won’t be protected when you’re gone.
3. Always update your policy
Life changes quickly. One day your children are relying on you for financial support, and the next day they’re buying you a home. Your life cover must be assessed annually, or even more often, to make sure you have the right beneficiary on board.
After paying towards your life cover for so many months, you want to make sure those nearest to you are taken care of. As a rule of thumb, when someone becomes financially dependent on you, it’s time to have another look at your life cover.
Supporting your chosen beneficiary when you’re gone is the whole reason you have life cover in the first place. Make sure you choose wisely, and that all your loved ones are protected.
If you have specific questions about your beneficiaries or any other life cover related matters, contact us on 0860 994 096 or email email@example.com.