Life Insurance Beneficiary Overview.
WHAT IS AN INSURANCE BENEFICIARY?
An insurance beneficiary is a person or person(s) who will receive the lump sum payment, or death benefit, in the event you pass away.
WHO CAN BE AN INSURANCE BENEFICIARY?
Anyone who has an ‘insurable interest’ can be an insurance beneficiary. An insurance beneficiary is typically a spouse, child, grandchild, other family members, or close friend of the policy owner. However, a business partner, charity, or nonprofit organization can also receive life insurance benefits.
DOES AN INSURANCE BENEFICIARY NEED TO DO ANYTHING TO RECEIVE A DEATH BENEFIT?
Yes. An insurance beneficiary will need to know the insurance company's name to contact them and start the claims process. They will also need to fill out any required claim paperwork, which typically includes a certified copy of the insured's death certificate.
ARE DEATH BENEFITS TAXABLE?
In most cases, an insurance beneficiary does not have to pay taxes on death benefits they receive. Yet another benefit of life insurance.
Can you take a life insurance policy out on anyone?
No – you can’t take a life insurance policy out on just anyone. We have learned that the policyholder is the owner of an insurance policy, and the insured person is who the life insurance contract insurers, and they do not have to be the same person. However, there are stipulations on who a policyholder can take out a life insurance plan on.
You can only take a life insurance policy out on someone you have an insurable interest in and only with that person's consent. For example, a businessman can take out an insurance policy on their business partner if they agree. If the business partner passes away, the businessman can suffer financially, which serves as the insurable interest.
It's important to remember that knowledge and consent are essential for taking a life insurance policy out on someone else. A spouse can't even take out a life insurance policy and get the benefits of life insurance on the other spouse without consent.
Life insurance for the self-employed
When you work for yourself – go Woligo.