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Naming A Beneficiary For Your Life Insurance Policy

You May Name More Than One Person As Beneficiary Of A Life Insurance Policy

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In fact, you may generally name as many beneficiaries as you would like, subject to the terms and conditions of the policy. We know of one policy that had more than 20 beneficiaries listed. Beneficiaries who will split the proceeds are called "joint beneficiaries." 

If you name more than one person as beneficiary for a policy:

  • State how the policy proceeds are to be distributed among the beneficiaries. You can simply indicate that the proceeds are to be distributed equally, meaning that each named beneficiary would receive an equal share.  Alternately, you may indicate what percentage of the proceeds each named beneficiary will receive. 
  • It is preferable to indicate how to divide the money by using percentages as opposed to dollar amounts in case there are even minor adjustments to the amount the insurance company pays. For example, if the death benefit is $100,000, and you want to give the money equally to four beneficiaries named W, X, Y and Z, list them as W 25%, X 25%, Y 25% and Z 25% rather than W $25,000, X $25,000, Y $25,000 and Z $25,000. If the death benefit ends up being $95,000, or over $100,000 with dividends and accrued interest, and you use specific dollar amounts instead of percentages, there may be an expensive time delay deciding what to do.
  • Mention what would happen if one of the beneficiaries dies before you.  For example, if you leave a policy 50% to Jack and 50% to Jill, what happens if Jack dies and then you do? Does Jill get it all, or do you want Jack's share to go to his kids or to someone else entirely?  The designation could read, something like: "50% to Jack and 50% to Jill, equally or all to the survivor." This would mean that if both Jack and Jill were alive when you die, they would each receive 50% of the death benefit. However, if one died before you, the other would receive everything. You could say: "50% to Jack and 50% to Jill, equally or per stirpes."  "Per stirpes" is a legal term meaning by the root. If you leave an asset this way, the deceased beneficiary's share passes to his or her beneficiaries instead of to the other named beneficiary. In this case, if Jack died before you, Jack's kids would  each receive an equal share of Jack's portion.

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