What is a beneficiary?When you purchase a life insurance policy you can name a beneficiary. A beneficiary is a person or persons who will receive the death benefit from your life insurance policy when you die. If you die without naming anyone, the money will go to your estate (the sum of all your property, possessions, financial assets and debts) by default. When you name a beneficiary, the money does not go to your estate, but goes directly to the beneficiary. Show
Who can be a beneficiary?You can name your spouse, children, dependants, another family member, a friend or a charity as a beneficiary. If you name more than one beneficiary, the insurance company will divide the death benefit between them. You can assign percentages of the death benefit to each beneficiary, e.g. 50 per cent to your spouse, 50 per cent to your children. Can I name my under-age children as beneficiaries?In Ontario, children under 18 cannot receive control over any money left to them in an insurance policy. If you want the children to receive the money, you should name a trustee or administrator and set up a trust for the children. When you die, the trustee or administrator will hold the death benefit in trust for the children until they are 18 years old, at which point the money will be paid out to the child. It is important to choose a responsible trustee who you can trust. The trustee is responsible for:
TIP: Consult with a lawyer or financial advisor for more information on naming your children as beneficiaries. If you die without naming a trustee or administrator, the death benefit, and any earned interest, will be held in trust by the province of Ontario, and will be paid out when the children reach legal age. Can I name my estate as beneficiary?If you name your estate as beneficiary, the death benefit will become a part of your estate. The funds will be used according to the terms of your will. If you choose this option, keep in mind that the death benefit will be subject to estate administration tax. The estate administration tax is charged on the total value of your estate, including all property, possessions and financial assets. Creditors may claim the death benefit to pay for any outstanding debts. This could result in your family receiving less money than they would if you named them as beneficiaries. How do I name a beneficiary?If you wish to, you can name your beneficiaries when you purchase your policy. You should discuss your plans with your beneficiary. You should decide if the beneficiary is revocable, or irrevocable.
How do I update or change my named beneficiaries?There are different requirements for revocable and irrevocable beneficiaries. Contact your insurance agent or company for more information. What if my beneficiary dies before or at the same time I do?You can name an alternate or contingent beneficiary. This person will receive the death benefit if your named beneficiary dies before you or at the same time you do. If you have not named an alternate or contingent beneficiary, your death benefit will be paid to your estate. Beneficiary Order of PrecedenceIf there isn't a valid designation on file when you die, benefits are payable in this order: First: to your widow or widower Second: if none, to your child or children in equal shares, with the share of any deceased child distributed among that child's descendants Third: if none, to your parents in equal shares or the entire amount to your surviving parent Fourth: if none, to the executor or administrator of your estate Fifth: if none, to your next of kin under the laws of the State where you lived at the time of your death. BE SURE to read the specific instructions on each designation form before designating beneficiarites. Want help navigating life insurance? A key step in purchasing a life insurance policy is choosing your life insurance beneficiary – the person (or entity) who will receive the cash benefit from your policy after you die. Who, or what, can be a life insurance beneficiary?You can name:
When you designate beneficiaries, you have the final say over who receives your death benefit. If you don't choose one, your state's laws determine who gets it – and who wants to let their loved ones fend for themselves against a state bureaucracy? Primary beneficiary, secondary beneficiary or more?Your primary beneficiary is first in line to receive your death benefit. If the primary beneficiary dies before you, a secondary or contingent beneficiary is the next in line. Some people also designate a final beneficiary in the event the primary and secondary beneficiaries die before they do. How do you choose a life insurance beneficiary?This is a very personal decision. Some people want to use a death benefit to protect their loved ones, and other people look at it more as a financial transaction. Who will need extra money when you pass away? Are there people who depend on you for financial support? People who will bear certain expenses at your death? These are the issues to consider when choosing your beneficiary. Other factors to considerWhen naming life insurance beneficiaries, keep these things in mind: State or policy life insurance beneficiary rules − Your state or the insurance carrier may restrict who you can name as a beneficiary. For example, if you're married, your spouse may have to sign a waiver before you can name someone else as the beneficiary. Last in line? − Who receives the proceeds if none of your beneficiaries survive you? Should the assets pass to your estate? Or would they be better off in a trust? Changing beneficiariesWith most policies, you can change your beneficiaries at any time. Review your policies regularly, and don't forget to make appropriate changes when your life changes – like when you get married, have a baby or move your kids out of the house – or back in. Need help?You don't have to figure all this out by yourself. Contact your investment professional today to discuss your specific needs. Related topics & resourcesProduct, coverage, discounts, insurance terms, definitions, and other descriptions are intended for informational purposes only and do not in any way replace or modify the definitions and information contained in your individual insurance contracts, policies, and/or declaration pages from Nationwide-affiliated underwriting companies, which are controlling. Such products, coverages, terms, and discounts may vary by state and exclusions may apply. What is the order of precedence for beneficiaries?It is only necessary to designate a beneficiary if you want payment to be made in a way other than the following order of precedence: To your widow or widower. If none, to your child or children equally, and descendants of deceased children by representation. If none, to your parents equally or to the surviving parent.
How are life insurance beneficiaries divided?You can usually split the benefit among multiple beneficiaries as long as the total percentage of the proceeds equal 100 percent. Some people name a trustworthy adult — their spouse, for example — and rely on their judgment to consider giving money to benefit other family members or loved ones.
Who receives the proceeds from a life insurance policy?Answer: Generally, life insurance proceeds you receive as a beneficiary due to the death of the insured person, aren't includable in gross income and you don't have to report them. However, any interest you receive is taxable and you should report it as interest received.
What are the rules for the beneficiary of a life insurance policy?Your primary beneficiary is first in line to receive your death benefit. If the primary beneficiary dies before you, a secondary or contingent beneficiary is the next in line. Some people also designate a final beneficiary in the event the primary and secondary beneficiaries die before they do.
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What is the order in which beneficiaries receive proceeds from a life insurance policy?
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