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In the matter of life insurance, many a times we stick to thinking about the type of policy we wish to opt for and whom we want to make the primary beneficiary. However, there’s another crucial step that’s often overlooked i.e. designating a Contingent Beneficiary. Those close to you and future generations may be affected in a big way by this small gesture in everyday life. Now let’s figure out why it is critical to name the contingent beneficiary, and how service providers such as Ethos help you make your life insurance policy as effective as possible.
Who are Contingent Beneficiaries
A contingent beneficiary is a person or entity that will be the recipient of the policy’s amount in the event that the primary beneficiary declines to take the money or cannot do so.
Why Naming a Contingent Beneficiary Matters?
Avoiding Probate
The first among the probably numerous reasons to name a contingent beneficiary is to prevent your life insurance policy from passing through the probate process. Probate is the court supervision of the distribution of a deceased’s estates and this can be messy, costly and takes time as well as being aired to the public. The advantage that comes with the process of naming a contingent beneficiary is that your life insurance benefits are paid out to the beneficiary of your choice without ever going through the process of probate.
Ethos, a modern life insurance company, also knows this and makes it easy for the policyholder to provide the initial and substitute beneficiaries.
Thinking about loved ones
People sometimes forget that life is dynamic, and events intercede in many ways affecting an individual’s ability to work. This is the reason if you name a contingent beneficiary, you are ensuring your family has an added shield. If you and your first choice die at the same time, then your money will be forwarded to someone you know would not embezzle it.
This is so if you have dependents like children or old parents that you are still catering for their needs. Ethos understands the importance of this protection and avails the necessary information that enables you to make right decisions concerning your beneficiaries even the contingent ones.
Maintaining Control Over Your Legacy
This means that whereas naming a contingent beneficiary helps you avoid potential legal controversies regarding the life insurance money, you still have full say on how the money will be used in the event of an occurrence of the event you have named. If there is no choice of a contingent beneficiary, it may go to the courts or your insurance company’s standard policy which may be the opposite of your wish.
Ethos helps its policyholders to manage their legacy by providing them with choices of how they want to name and change beneficiaries in easy ways. This aspect depicts them as a very transparent company that does everything possible to educate its customers, so they can make the right decision concerning their conditions.
Preventing Delays in Benefit Payouts
Indeed, if you do not nominate a contingent beneficiary and something befalls your primary beneficiary, it will take several years for the pay out of your life insurance benefits. You may include, this delay could put your next of kin under financial strain, most especially if they needed the monies to pay for things like funeral expenses or the next bills due.
Ethos also respects the need of early pay-outs and tries to minimize the time that it takes to process claims. Thus, they assist in taking the policyholder’s name on contingent beneficiaries as a way of facilitating proper payment at the appropriate time.
Flexibility for Changing Life Circumstances
It may be necessary to remind clients that life changes and the needs in the insurance area may change as well. It is the best time to review your life insurance proceeds if you plan to get married, have children, or have any other life changing events. I conclude that contingency has its benefits when it comes to the selection of a beneficiary because it provides room to accommodate change.
An additional advantage of using Ethos is it’s always possible to change the beneficiaries, including the contingent one, according to one’s life changes. You can always modify it online; thus your policy will be always up to date reflecting your current desires.
How to Choose a Contingent Beneficiary?
Here are some factors to keep in mind:
- Trust: Select a trustworthy person who will manage the financial aspect transformation that occurs when one receives the life insurance pay out.
- Financial stability: Take time and think about your possible contingent beneficiary about his/her financial solvency. Will they be able to act suitably and prudently with the money?
- Age: If you do decide that you want to include a minor as a secondary beneficiary, then know that insurance companies cannot issue the benefits to a minor. You may require to open a trust or appoint a guardian.
- Multiple beneficiaries: You may designate more than one contingent beneficiary and should show the proportion of the benefit they are to receive.
- Charities or organizations: it is always wise to name your favorite charity or even an organization as your contingent beneficiary.
Conclusion
Choosing a contingent beneficiary offers additional protection for someone’s close ones, does not go through the probate process, allows the individual to have more control over their costs, ensures timely access to the benefits and has the flexibility, as they can be adjusted with changes in life situations.
Do not underestimate the role of this element of the insurance policy. Divide time to consider and name the contingent beneficiary with a lot of attention. Finally, if you intend to get a life insurance company that makes this process easy, consider Ethos. They have a liberal attitude towards life insurance and they educate their clients and empower them hence any person who wants to safeguard their family’s future should consider going for this company.
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