Is Beneficiary Choice More Important for Single Parents?

Deciding upon a beneficiary to a life insurance policy is a very important choice to make, just as important as keeping a will updated. If you are a single parent, you may wonder whether you have more to be concerned about when making a choice as to whom to designate as your life insurance beneficiary. For the most part, if you are still raising a child and doing so on your own it may be the best thing to make your child's designated guardian the beneficiary.

Whoever you put as your life insurance beneficiary is going to remain that beneficiary for the duration of the policy. You may wonder why you cannot put your child as the beneficiary. If the child is a minor, a life insurance company is not likely to pay out benefits to them because they are not of legal age. You can choose to name the child as the life insurance beneficiary now, and do so assuming that you will not need the coverage until many years in the future.

If luck goes your way, and your child attains legal age by the time the policy benefits are needed, there should be no problem. However, for most parents, the whole point of getting life insurance is to protect their families in the event of their death. Obviously, with a single parent it is likely that the parent's income is the main source of funds going into operating the household. If that parent died and left behind a minor child, the life insurance benefits would need be put to use the way they were intended.

Choosing a Suitable Beneficiary

But, what happens if the benefits are needed and the child is still under age? If this would cause a problem with the child obtaining the benefits, it is best now to choose a suitable beneficiary who is well above legal age. A first choice might seem like adding the child's other parent as the beneficiary. However, this may not be the most convenient choice to make if the child's parents are divorced.

As a single parent, you may want to trust that the child's other parent would do what would be best for the interest of the child. In the case of attaining life insurance benefits designed to help the child, a parent may hope that the ex-husband or ex-wife would do a suitable job of being a beneficiary. But if the relationship already has strains, it may not be the most comfortable route to go in designating a beneficiary.

A single parent may designate a grandparent as a beneficiary. But, this creates the problem of needing to designate another beneficiary in the event the grandparent passes away before they are able to fulfill their duty as beneficiary. It would seem a single parent has a lot of work to do in choosing a life insurance beneficiary. What is important to note is that even if a single parent has a will, the beneficiary in a life insurance policy remains as designated. The will does not have an affect on altering who will take care of life insurance benefits in the event the single parent passes away.

One thing for a single parent to keep in mind is that a life insurance beneficiary may remain in place for the duration of the life insurance policy. However, this is only the case if the parent does not change the designated beneficiary, which they can do formally with the life insurance company at any time. A life insurance beneficiary is not necessarily more important for a single parent to make, but it can be more challenging.

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