Life Insurance Beneficiary Minor – Protecting Your Children After You Are Gone
The beneficiary of a life insurance policy is usually the individual that receives the life insurance benefit in the event that the policy holder dies or is diagnosed with a terminal illness with only a year to live. The beneficiary is usually nominated by the policy applicant at the time of application so that in case there is more than one beneficiary, there is proper allocation of the benefits. Nomination of life insurance beneficiaries minor significantly reduces the legal and cost implications that may arise when sharing out the benefit.
Nomination Of Beneficiaries
There are no specific limitations or criteria when choosing a beneficiary. A policy holder can choose whomever they may wish, whether adults or children, as beneficiaries.Most people who take life insurance policies usually nominate their spouses and/or children as beneficiaries. When minors are nominated as beneficiaries, a trust or a guardian ought to be assigned to receive the funds on their behalf.
Life Insurance Beneficiary Minor
There are many instances in which policy holders have nominated individuals who are minors as the life insurance beneficiaries of their policies. This is often the case for parents taking life insurance nominating their young children, who are usually under the age of 18 years, as beneficiaries. There have been instances in which the appropriate age in some policies has been as high as 25 years. It has been highly recommended that the parents, in this case the policy holders, establish trusts for their children, to which all benefits are directed and managed by a trustee. Once the life insurance beneficiary, a minor, attains the age stipulated as appropriate to receive the benefits, then they are able to access their benefits.
Benefits Of Trusts
Trusts are a great way to ensure that minors’ benefits are well managed prior to them receiving them. In the event that a parent passes on while the life insurance beneficiary is still a minor, then a trust fund is established for them. The major advantage of these trusts is the fact that they delay the transfer of the benefits until a time deemed fit by the policy for them to receive it. Trusts also greatly protect the interests of the beneficiaries. Establishing a fund also enables the policy holder avoid the instance in which the court nominates a guardian for your children in the event of a benefit being paid out due to the absence of a trust fund, who may not be your person of choice. Read: How to explain value of my car or property to insurance agency!
Considerations To Make For Life Insurance Beneficiary Minors
Raising children is a considerably expensive undertaking. Therefore, in the event that you nominate a minor as a life insurance beneficiary, it is important to ensure your life insurance cover is capable of taking care of them well enough into the future so that he or she does not have to struggle or lack essentials if you are not there to provide for them. You need to factor in costs that may be incurred on education, medical bills, food and clothes among other essential needs. All appropriate costs need to be catered for depending on the number of minors named as beneficiaries in the policy, you can also visit us for more information.