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What is a Contingent Beneficiary For Life Insurance?
What is a contingent beneficiary for life insurance? In simple terms it is the person that is designated in case you pass away and no surviving spouse or children are left. So, what is the purpose of a contingency plan and why is it beneficial for you?
Life insurance is a way of protecting your loved ones from financial loss upon your death. You can have policies that pay out a lump sum, a lifetime allowance or a deferred amount depending on what the insurance company prefers. This will allow the family to pay for bills and day to day expenses if you were to pass away.
One reason you may want to consider this is because you are a single parent and you have two or more dependent children. What if one or more of them passed away while you were still alive? You will be faced with the decision of whether to pay off mortgage or credit cards, pay for college tuition or funeral costs of the dependent's children. It is impossible to know what the future holds. This is where the dependent's children benefit from a will.
The answer to the question 'what is a contingent beneficiary for life insurance?' is dependent's children. You can create a trust that will designate beneficiaries. Once you die your family will get the proceeds if you leave a designated beneficiary. If you don't have a will, you will likely need to rely on your estate plan to decide who gets what. This could mean a lot of legwork for both you and your legal representatives.
Why would you want to create a trust to name a dependent? If you have more than one dependent, the proceeds from your life insurance policies may not be sufficient to cover the costs of those dependents. If you want to make sure that your family will be able to meet those expenses your beneficiaries should receive a substantial part of your proceeds. By creating a will you can name your children as co-owners of your life insurance policy and take responsibility for them in case you pass away. In shannons comprehensive car insurance , life insurance proceeds may be exempt from federal income tax if they are directed towards educational expenses.
There are two ways to create a will that becomes a contingent beneficiary for life insurance proceeds. First, you can do it yourself. To do this you will need to obtain a life insurance policy that names someone as the designated beneficiary and file the appropriate forms with the state. Second, you can hire a life insurance agent or a lawyer to assist you in filling out the appropriate forms and making sure that your will takes effect as you intended.
Some people may wonder what will become of their dependents in the event of their death. The answer depends on the type of life insurance policy you have chosen. If you select an amortized insurance plan in which your premiums are paid monthly, your dependents will receive payments at the time of your death. If you prefer to name other people as dependents, then your estate will be transferred to those named in the will after you die, and your dependent's estate will be distributed according to the state intestacy laws.
One very good reason for having a will is to protect your surviving family members from the probate court system. Even if your estate is prepared by a lawyer, probate can drag on for many months. Probate involves months of hearings in which attorneys make arguments about who will receive what, when, and how the money will be dispersed. A will can also protect your surviving family members from having to pay large judgments after their loved one has passed away because of being unable to pay medical or credit card bills. In short, what is a contingent beneficiary for life insurance gives you and your family peace of mind while you are still living.
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