When investing in a life insurance policy, one of the most important decisions you will have to make is the beneficiary. For some Canadians, choosing their beneficiary is an easy task, but for others, determining who should be listed as a beneficiary is more complicated or challenging for a number of reasons. Once you select the best insurance policy for your family and lifestyle with Insurance Supermarket, use these valuable tips to help you determine how to choose your beneficiary.
Your beneficiary is the person or entity you have chosen to receive any benefits from your life insurance policy after your death. There is no requirement for who or what organization is the beneficiary, as this decision is a deeply personal one.
Virtually anyone can be chosen as a beneficiary, including:
While selecting a beneficiary should not be overly stressful, as you can change your mind in the future, it’s essential to choose wisely to ensure that your money and assets go where you want them to go and help your loved ones avoid potential legal complications or delays.
Typically, the primary motivation for getting life insurance is to protect someone who depends on you financially. This could be your spouse, children, or even aging parents. When selecting a beneficiary, think about who would face the most significant financial hardship in your absence.
If you have young children, you may consider naming your spouse or setting up a trust with them as trustee. If your children are older or financially stable, you might divide the benefit among them equally. At Insurance Supermarket, you can find plans that make the most sense for your family setup and needs.
In Canada, insurance companies cannot pay a life insurance benefit directly to a minor. If you name a minor as a beneficiary without any additional legal provisions, the funds could end up in provincial custody until the child turns 18 or 19, depending on the province you or your beneficiary lives in.
To avoid complications with minors as your beneficiary, consider appointing a trustee for the funds or establishing a trust that outlines how and when the money should be used for the child’s benefit. This provides greater control and avoids delays or mismanagement of settlements after you’re no longer around.
Marriages, divorces, births, and deaths can all affect your priorities. Make a point to review your life insurance policy regularly and update your beneficiary designation when necessary. If you get married or divorced, your previous designation may no longer reflect your current wishes. Keeping it up to date helps avoid disputes or unintended consequences for your loved ones.
At Insurance Supermarket, for over 15 years, we’ve helped Canadians from all walks of life find life insurance policies that reflect their unique needs, providing a number of options and guidance, including tips on naming the right beneficiaries.
