There are many specific reasons for different people (or companies, trusts, etc.) to have life insurance to protect their beneficiaries should the insured pass away.
Below I will list just a few examples of who or what entity you may want to insure and which type beneficiaries you want to list on a life insurance policy.
- Insure: Yourself
Especially if you are the breadwinner and have a spouse and/or dependent children or sometimes even dependent elderly parents that rely on your income.
Possible beneficiaries you may want to consider: Spouse, children over legal age, or a trust for minors. (Possibly even dependent elderly parents listed as beneficiaries, if applicable.)
Note: Be careful not to list children under legal age as beneficiaries since their legal guardian (if both you and your spouse pass away) would have control over the money, not your actual children that are minors. You may want to consider creating a trust for that type situation unless you have a predetermined designated legal guardian in place which you feel is trustworthy and will have your children’s best interests at heart. - Insure: Spouse
If you have dependent children you should also insure your spouse. (Even if your spouse is not the breadwinner.) Consider that you, as a survivor, may need to start to pay for full time child care, etc. since you may still need to work full time to earn income after the death of a spouse, thus not allowing you to devote your full time attention to your children.
Possible beneficiaries you may want to consider: Yourself, children over legal age, or a trust. - Insure: Key Person (Key Man)
Life insurance taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of an important member of the business.
Possible beneficiaries you may want to consider: Company that employs the key person. - Insure for: Buy-Sell Agreement
A buy-sell agreement (may also be known as a buyout agreement), is a legally binding agreement between co-owners of a business that governs the situation if a co-owner dies or is otherwise forced to leave the business, or chooses to leave the business. It may be thought of as a sort of premarital agreement between business partners/shareholders or is sometimes called a "business will". An insured buy–sell agreement (triggered buyout is funded with life insurance on the participating owners' lives) is often recommended by business-succession specialists and financial planners to ensure that the buy–sell arrangement is well-funded and to guarantee that there will be money when the buy–sell event is triggered.1
Possible beneficiaries you may want to consider: Partners / Shareholders
1. Source: Wikipedia Partial Definition https://en.wikipedia.org/wiki/Buy%E2%80%93sell_agreement
For other circumstances, below are some choices of who you should consider as your beneficiaries:
- Family
- Legal Guardian
- Estate
- Trusts
- Charity
Insuring Important Milestones Of Your Life For Purchasing or Increasing
Life Insurance:
- Married or Getting Married
- A Parent or About to Become One
- Being A Homeowner or Buying a New Home
- Changing Jobs
- Retired or Planning for Retirement
- Single (While providing financial support for parents)
Note: Life Insurance information can be confusing to many people. As an "independent licensed agent" I can explain things to you in simple terms so you feel comfortable making a decision. Then I can help you choose a life insurance policy, from many choices of different insurance companies, that you feel fits your needs. Plus if you choose to work with me you will have personalized service by a local agent that can shop premium quotes for you. If you would like my assistance to discuss and/or start the process of getting you insured please call me at 941-404-5334.