Life Insurance Beneficiaries In NJ
Choosing a life insurance beneficiary in NJ should be a simple process, with very little stress involved. While it generally is a straightforward process, there can be a number of potential financial, legal and tax problems that can result from improperly naming your beneficiaries. It’s important to avoid certain costly mistakes when naming life insurance beneficiaries in NJ.
Most of the time, life insurance beneficiaries are the spouses and children of the policyholder. However, it does not have to be that way. The person or people you choose as your life insurance beneficiaries in NJ is completely your choice. While who you choose as your beneficiary is a very important choice, how you name them is also an important choice.
The Difference Between Primary and Contingent Life Insurance Beneficiaries
There are two ways to go about legally naming a life insurance beneficiary in NJ.
- Primary beneficiary: A primary life insurance beneficiary is the person(s) who will receive the proceeds of the policy when the life insurance policyholder dies.
- Contingent beneficiary: Otherwise known as a secondary beneficiary, this person will not receive any life insurance proceeds unless the primary beneficiary is no longer alive. The secondary beneficiary would, for example receive proceeds if the policyholder and the primary beneficiary passed aways at the same time.
Most professionals will tell you, to avoid any issues in the future, naming both a primary and a contingent beneficiary at the same time is the best, and safest way to go.
The Difference Between Revocable and Irrevocable Life Insurance Beneficiaries
There are also two different classes of beneficiaries. They are revocable and irrevocable beneficiaries.
- Revocable Beneficiaries: The policyholder has the right to change the beneficiary of the policy at any time without any consent from the previously named beneficiary.
- Irrevocable Beneficiaries: The owner of the life insurance policy cannot change the designation of the beneficiary without the consent of the original beneficiary.
With all futures being unknown, most experts will tell you to avoid potential legal issues, you should choose revocable beneficiaries. It is a simpler options should you ever want to make changes for any reason in the future.
What If My Beneficiary Dies Before Me?
In the unfortunate event your beneficiary passes away, you will need to rename your beneficiary as soon as possible. It is actually as simple as requesting a “change of beneficiary” form from your insurance company. Should you and your beneficiary dies at the same time, the proceeds will go to your contingent beneficiary if in place, or simply to your estate.
There are a lot of personal decisions involved in choosing the right life insurance plan for yourself and your family. Naming a life insurance beneficiary in NJ is the most important. All of the plans you make are with the thought of your beneficiary in mind. Take the time to talk to an independent life insurance agent at Bogle Agency Insurance in Bergen County NJ and we will find the best plan that meets your needs.
Please also visit our NJ Life Insurance Options page for more information.