Having a life insurance policy in place means that you are actively taking a step towards protecting your loved one's financial future. Preparing for a time for when you will no longer be around, but if you are wondering who will receive the claim pay out, here is what you need to know.
You get to choose your beneficiaries
When you take out life insurance, the policy will be written under your name - the policyholder. You will be responsible for paying the premiums to keep your policy active. Your insurer will ask you if you have any beneficiaries that you would like to list to benefit from your policy.
A beneficiary can be a friend, a relative, a spouse, or even your children who will be paid out the claim amount once you have passed on.
What if I don’t have someone to list?
You can choose to add your selected beneficiary(s) in the time of inception of your policy. However, should you have no one in mind, or any dependants, it is possible to add them at a later stage. In some cases where people do not have any relatives, it is possible to list a charity or have the claim paid out towards your estate or any possible debts you may have accumulated.
Things to consider
Life insurance offers you the flexibility of adapting according to the stage of life that you are in. You can always add or remove beneficiaries to keep your policy up to date. Having it is also a great way to protect your financial future and can be used while you are still living.
Keep in mind that you will have to choose how you will want to split the payout. For example, if you list three beneficiaries you will have to divide the payout out of 100 for example (40/30/20) or (33/33/33) or however you see fit. Always remember to speak to your insurer to keep your policy updated and ask if there would be any additional fees that come with adding more than one beneficiary.