Northwestern Mutual: Policyholders of universal life insurance and whole life insurance likely know that the policy features a guaranteed death benefit. This means beneficiaries may change several times throughout the life of the policy as priorities change, children grow up, and grandchildren are born.
For policyholders thinking about how to distribute their guaranteed death benefit, here are some options:
Leave it to a spouse: A spouse is usually the first person a policyholder would think of when it comes to leaving behind a death benefit. Often, they’re the primary beneficiary of the policy and receive the largest percentage. Couples in retirement, with fewer debts and financial responsibilities, might decide to divvy the death benefit up amongst other relatives.
Leave it to children: Parents often take out life insurance policies to create financial security for their children in case the unexpected happens. The death benefit can pay for education, living expenses or any other debts or financial obligations the children might have.
Leave it to grandchildren: Similar to leaving the death benefit to children, some grandparents opt to leave the death benefit to their grandchildren. The money can help pay for tuition, room and board or any other expenses associated with higher education, or provide a nest egg.
Leave it to charity: Policyholders can also choose to leave all or part of their death benefit to charity. This is a popular option for people who have been heavily involved with an organization throughout their life, feel attached to a cause or make regular monetary gifts.
- Leave it to a professional organization: Professional organizations, such as the American Medical Association or American Bar Association, allow members to bequeath a portion of their death benefit to the organization as a gift. This can be a way to give back to an organization that has been supportive throughout one’s life and career.
The bottom line
The death benefit from a permanent life insurance policy can be a great way to provide financial security for loved ones or support a cause that was important to the policyholder. And it’s not an all or nothing choice. Policyowners can leave the benefit to multiple people or organizations. These are just a few of the many options available to those who are looking to use their death benefit in a meaningful way.