Life insurance may be one of the most important purchases you’ll ever make.
An important decision to consider when purchasing a life insurance policy is who will receive the cash benefit
from your policy and will that person administer the assets as you intend. It is very important to choose
a beneficiary because if you do not choose one, state laws can determine how your estate will be allocated.
There are different beneficiaries you can name, including:
A Primary Beneficiary
This is the person or entity that is first in line to receive the policy benefits.
A Secondary Beneficiary
This is the person or entity that is second in line to receive the policy benefits. This beneficiary will only receive the policy proceeds if the Primary Beneficiary is deceased.
Once you have named your beneficiaries, there is a decision to be made.
If a beneficiary dies before the insured, the deceased beneficiary’s share of the policy proceeds can be divided proportionately among the surviving beneficiaries.
OR
If a beneficiary dies before the insured, the deceased beneficiary’s share of the policy proceeds can automatically be passed down to the deceased beneficiary’s heirs.
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