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What is a Life Insurance Secondary Beneficiary? How can life insurance become a life insurance secondary beneficiary? In the simplest of terms, when you die, your dependents such as your spouse and children may receive payments from your life insurance policy. However, egg-insurance.com may also be possible for other people to claim on your policy. If your family receives a payment from your policy in the event of your death, they become the new primary beneficiary. This can happen in situations where there is no other suitable beneficiary to replace you, such as when you die while still married or immediately after divorce. A life insurance secondary beneficiary is not required by law, although it can create a situation where you can receive more money than you would otherwise be entitled to. The way this works is that, if you die without a will, then your loved ones are only entitled to the death benefits provided under the policy, not any additional money. In some cases, you may be able to change this arrangement under certain circumstances. If you choose to make a different beneficiary responsible for receiving the death benefit from your life insurance policy, then you must provide documentation such as a Will or power of attorney. This ensures that your beneficiaries do not become disqualified from receiving any of the death benefits. If you become the primary life insurance beneficiary, then anyone who has been named as a secondary beneficiary can take out the cash payout. However, there are often questions surrounding who can make claims on your life insurance policy. In the case of death by suicide, a beneficiary may be chosen by the suicide note or the court when it is brought into their jurisdiction. It is also possible to have someone assume the role of a secondary beneficiary if they have enough financial resources, such as from a joint account or inheritance. There are many different methods for choosing a life insurance secondary beneficiary. In most situations where a spouse dies, both the husband and wife are named on the policy. Under these circumstances, only one of the spouses can be designated as the secondary life insurance beneficiary. Many people prefer to use the Social Security Death Index (SSDI) as a method of choosing beneficiaries. If you name both your spouse and your children as beneficiaries, then you will remain on the SSDI for the duration of your life, making it very easy to access the money. Other common methods used for naming life insurance secondary beneficiaries are: relatives (stepchildren, grandchildren, or parents); a trusted friend; or a business associate. When you add a beneficiary's name to your life insurance policy, you will be paying a fixed amount each month, irrespective of your beneficiary's needs at the time of death. You will also have access to the funds once your death anniversary is reached, should you have not already done so. Although not officially required, you may want to designate one of your beneficiaries as the primary beneficiary. The benefit of this can be transferred directly to the life insurance company should you die. This allows the company to compensate your beneficiaries in any way they deem appropriate. While it's generally advisable to name your children as primary beneficiary, you can name them as co-trustees with the company, if you think it will help your family. There are situations where naming a secondary beneficiary is not recommended. In some life insurance contracts, co-trustees will not always be designated. If you enter into a life insurance agreement with a life insurance company, they will likely assign your beneficiaries to their own trust. In some cases, the company itself will decide who your beneficiaries should be, based on your health rating and other personal information. As stated before, there are many different reasons why you might want to consider naming a secondary beneficiary. You may want to transfer the entire life insurance contract to your children, should you die. Or, you may simply want access to the funds on your death anniversary. Before you make this important decision, speak with a qualified life insurance agent. They can provide assistance by discussing which options are right for your situation.