How can I name my child as my life insurance beneficiary? One of the most important steps in purchasing a life insurance policy to secure the financial future of your child is adding them as a beneficiary on the policy.
In the event of an untimely death, life insurance can offer vital support. This guarantees your child’s safety and providing money for living expenses, schooling, and other necessities.
However, naming your child as a beneficiary on your life insurance policy isn’t just filling out a form. It also involves carefully weighing the legal ramifications, age-related considerations, and your overall financial obligations.
Perhaps you may be wondering how to name your child as your beneficiary; worry less; we’ve got you covered. Read on, as we provide detailed and comprehensive steps involved in naming a child as a life insurance beneficiary.
Who Is A Beneficiary?
Usually, a beneficiary is someone, who can also be an entity, who is designated in an insurance policy to receive the benefits if the policyholder passes on.
If the policyholder were to die during the term of a life insurance policy. The beneficiaries named on the policy would receive the policy payout.
The insurance company performs the role of contacting the beneficiaries. Then inform them of the process involved in claiming the benefits on the insurance policy. In essence, a beneficiary is legally entitled to receive the benefit of a policy if the policyholder is no longer alive.
Why Do I Need to Name a Beneficiary on My Life Insurance Policy?
When purchasing a life insurance policy, the majority of insurance companies require individuals to provide information about someone who can receive the benefits once they pass on.
While it is not compulsory to name a beneficiary on a life insurance policy, it is believed that the sole purpose of buying a life insurance policy is to ensure that your loved ones are not left stranded in the event of your passing.
Hence, the need to name a beneficiary on your policy, as this would help the insurance company to give out the death benefit to the right person.
How to Name a Child as a Life Insurance Beneficiary
Naming a child as a life insurance beneficiary requires careful consideration of your overall financial goals and, most importantly, the age of your child.
It is often not advisable to name a child as a life insurance beneficiary because the insurance payout can be delayed due to age restrictions.
Nevertheless, it is possible for your child to attain the right age when it is time to receive the benefit on the policy. Here’s a detailed guide on how to name your child as a beneficiary on your life insurance policy:
Review Your Life Insurance Policy
This is the first thing you need to do when making the decision of naming your child as a beneficiary on your life insurance policy. Check your policy documents to have a better understanding of the terms and conditions attached to changing beneficiaries and adding a new one.
Contact Your Insurance Company
Once you have reviewed your existing policy documents. You can now reach out to your insurer to let them know of your intention to name your child as a beneficiary.
They are also in the best position to provide guidance on how to either name or change a beneficiary on your life insurance policy. They may have a specific process for adding a beneficiary, so it is important to seek additional information from your insurer.
Complete the Beneficiary Designation Form
The next step is to fill the beneficiary designation form with details of your child. Your insurance company will provide you with a form that requires you to state the full name of your child, their date of birth, their relationship to you, and other additional information.
Ensure you fill in the form with accurate information about your child. This is so as to avoid issues later in the future.
Notify Your Child
It often makes sense to inform your child about their beneficiary status depending on his/her age. Also, it is important to let them know of their status on your life insurance policy at the appropriate age.
The primary purpose of letting your child be aware is to promote financial planning.
Keep Documentations
Lastly, it is essential to have a safe place where you keep all important documents. Insurance documents are not an exception. Ensure you keep the beneficiary designation form and any other documents you have with your insurance company in a secure place that is accessible to you at any time.
In a situation where you want to review or update your policy if a major life event occurs. It would be easy for you to access important documents.
Conclusion
If your child is a minor, we strongly advise you to consider the age and legal implications of naming minors as a beneficiary. If you pass on during the lifetime of your policy, and your child is still a minor. It will be difficult to access the death benefit.
In most cases, payouts are delayed until the child reaches the right age. In some states, a court-appointed guardian is required to help manage the fund until the child attains the right age.
Essentially, factor in the age of your child when naming them as a beneficiary on your policy to determine. Whether it is the right choice or not.
There are other people you can name as beneficiaries on your life insurance policy. For instance, your spouse, parent, siblings, organizations, or close friends.
