When we buy life insurance, our most common goals are to take care of those who matter most to us or to protect those who depend on us in our absence. However, there may be other reasons to buy life insurance. Therefore, it is very important to choose correctly who we want to be the beneficiaries of our life insurance.
The life insurance beneficiary is the person who will be paid in the event of the death of the person who employed them.
In accordance with the Insurance Contract Law, the insured or the borrower can freely designate a beneficiary, which can be a natural person, a legal person such as a company or an organization, or a beneficiary can be designated in the insurance policy of life.
When we want our beneficiaries to be natural persons, we can do it in several ways:
- Explicitly include our beneficiaries or beneficiaries, or their names and surnames, in the insurance.
By including our beneficiaries in a generic way, only family ties are indicated (for example, our spouse, children, grandchildren…).
Establish multiple beneficiaries in the policy indicating the percentage of compensation that each one will receive. - Multiple beneficiaries are identified, but not the percentage they will receive so that the compensation is shared equally among them.
- When legal persons are chosen as life insurance beneficiaries, it is customary to deal with banks (which must be beneficiaries of life insurance linked to mortgages or home loans), companies (think of an entrepreneur who wants the When the insured wants to transfer his assets to the cause that has been committed, the remuneration is destined to maintain the activities of his company in his absence) or NGO.
What should we take into account when choosing the best beneficiary for our life insurance?
To choose the best beneficiary for your life insurance, the first thing to consider is the purpose of your policy.
If your goal is to protect your family or someone who is financially dependent on you so they can receive financial support to help them maintain a standard of living while you are away, there are certain things to consider as an individual or someone you want to protect.
Protect your spouse: If your spouse depends financially on you, or if one day you do not want to feel helpless when he/she is not there, as we have seen, you can indicate it in your policy in several ways. A bit, maybe a generic way of simply saying it’s your spouse or her first and last name. In this case, two aspects must be taken into account:
If you are married and indicate that the beneficiary is her spouse, you will only obtain compensation if the marriage is still in force at the time of her death.
In other words, if they were divorced, their spouse would be removed as a beneficiary, and the compensation would go to whoever was entitled to it in the order of priority established by the insurance law (that is, their descendants, if they did, their fathers). not child). , if their parents or legal heirs are missing, in that order).
If you are not married or do not directly name your spouse as a beneficiary, you should be aware that if the relationship ends or you change your mind at any time, you will need to explicitly amend your insurance contract to name a new beneficiary.
- Protecting your children: When your goal is to protect your children with your life insurance benefits, you need to consider their age. If your child is a minor, she will not be able to receive compensation, so we recommend that you establish records and designate a trustee to receive and hold the money until the child can use it.
- This is important because if you do not name such a guardian and your child is a minor in your absence, court proceedings will be opened to appoint a guardian, which will take some time and your child will not be able to count on Guardianship Compensation. duration. process.
- Protect those who are not self-sufficient: As with children, if you are the guardian of a dependent who cannot pay compensation, also consider who will act as the money manager to include you and avoid administrative paperwork.
- Debt repayment: If your life insurance requirement is not to leave outstanding debts to your descendants, as the life insurance is related to your mortgage loan payment, keep that in mind if you decide to change your mortgage loan. Another bank, either to improve terms or for other reasons, must notify your insurance company of the change.
Life is always changing, as are your needs or those of your loved one. Therefore, it is recommended that you review your life insurance policy each time and remember that you can change the beneficiary of your life insurance policy at any time.