Who Should Be My Final Expense Beneficiary?

No one likes to think about dying. However, a final expense life insurance policy can be a critical asset for your loved ones at a very difficult time. It’s important to understand what a final expense beneficiary is and how your life insurance policy works so that you can come up with the best strategy to protect them.

Choosing who your final expense beneficiary should be is a personal decision you need to make. It is generally advisable to select loved ones or those that are dependent on you as beneficiaries. For example, your family, your spouse, or your children could all be excellent options.

What is a Beneficiary?

A beneficiary is a person or entity you name in a final expense life insurance policy to receive the death benefit. You can name:

One person
Two or more people
The trustee of a trust you’ve set up
A funeral home.

Two “levels” of beneficiaries.

Your life insurance policy should have both “primary” and “contingent” beneficiaries. The primary beneficiary gets the death benefits if he or she can be found after your death. Contingent beneficiaries get the death benefits if the primary beneficiary can’t be found.

Final expense gives you the option to choose who you want your beneficiary to be and leave instructions for how your benefits should be located, but the final say is theirs. While this freedom can be a benefit in the event of unexpected expenses, there’s still the possibility that your final desires may not be followed to the letter. For this main reason. Your beneficiary should be someone trusted enough to make the best decisions for you and your loved ones. Many people decide to leave as their beneficiary a relative or spouse. More importantly, you should choose someone who has an insurable interest. In other words, you want a person who derives some benefit, financial or otherwise, from the continued existence of the insured party.

Should you pick one, two, or even three as your beneficiaries? Again, this is a decision that will be entirely up to you to make. A good starting point, however, is to begin by asking yourself the following questions:

Who is the most capable of effectively managing the insurance policy?

A very important question to have in mind in the process of designating beneficiaries for your final expense insurance policy is who is the most capable of handling this responsibility? It’s primary use is to cover any end of life costs such as funeral expenses, casket expenses, and more. Beneficiaries for an end of life insurance policy must be well equipped to manage this asset.

Are you planning on designating multiple final expense insurance beneficiaries?

If you’re planning on choosing more than one beneficiary for your policy, while this is certainly not a problem for most providers, you will need to consider just exactly how many beneficiaries you are going to plan on choosing. After all, are you planning on having just 2 beneficiaries or 5 beneficiaries? The ideal is having no more than 3 beneficiaries.

Choosing a Funeral Home as your Final Expense Insurance Beneficiary.

When you choose to assign your final expense insurance death benefits directly to a funeral home, you maintain the right to choose where your service will be held. When you name the funeral home as your beneficiary, the costs are prepaid. This leaves the family members with very little or definitely no responsibility for payments. As the policyholder, you make the funeral home the primary beneficiary of your policy with any proceeds left over targeted for the next beneficiary on the policy. You make this assignment through your final expense life insurance company.

Final Expense Beneficiary Assignment.

Your final expense beneficiary can fill out an assignment form at the funeral home. This will allow payment of the settlement to go directly to the funeral home. Again, any money left over is given back to the beneficiaries, once the funeral expenses are settled. Typically, the forms needed for a beneficiary assignment are available through the funeral home directly. You can also ask your agent to provide you with the necessary documentation.

Caveats for Assignments.

Once you decide who your beneficiary will be, it’s up to that person to assign the final expense insurance proceeds over to the funeral home. If the beneficiary decides not to participate in the funeral financially, he can keep the proceeds of the payoff. So, if your intention is to use your life insurance policy to pay for your funeral expenses, either make the funeral home the beneficiary or choose a trustworthy beneficiary who will follow your final desires. At the same time, use only a reputable funeral home for direct payments from your policy. And, it should be one that has been around for a while. Moreover, make sure it is run by an experienced family or corporation.

Choosing beneficiaries, and keeping those choices up-to-date, is an important part of owning final expense life insurance.