First, let us define LIFE INSURANCE. It is a legal contract wherein the insurance company agrees to pay a stipulated consideration to a designated beneficiary upon the insured’s death. Therefore, one can only get the sum amount of money that the policyholder paid for when the insured dies. The insurance will give that death benefit to the beneficiary. The beneficiary is either a person or entity that will receive the money from the insurance policy when the insured pass away.
Life insurance has two types of beneficiaries. These are the revocable beneficiary and irrevocable beneficiary. The revocable beneficiary in the life insurance policy is that the policy owner can change the beneficiaries and has the right and privilege on the policy without seeking the consent of the designated beneficiary. The irrevocable beneficiary in life insurance is that the policy owner has to seek the permission of the designated heir to exercise the policy owner’s right and privilege. Any changes that will be made in the policy, the signature of the irrevocable beneficiary has to bear. The policy owner cannot change the beneficiary.
The revocable beneficiary is usually the choice of those who purchase a life insurance policy to change their beneficiaries anytime and change their policies anytime. One of the good sides of this type of beneficiary is that if you are single and have no child, you can change your beneficiary once you get married. Thus you can change your beneficiary to your spouse or to your child. If your beneficiary passes away, you can change your beneficiary. If you decide to change where you can invest part of your premium, you can do so anytime without seeking your beneficiary’s consent. As a policy owner, you can control your policy to whatever changes you want.
The irrevocable beneficiary is not usually the choice of those who purchase an insurance policy because in every change the policy owner will make to their policy, he needs to seek the consent of their beneficiary and must also bear the beneficiary’s signature. However, you can choose this type of beneficiary if you need the guidance of your beneficiary in dealing with your insurance policy. This is usually selected by a married couple so that they can decide together on one’s policy.
If you are to purchase an insurance policy, make sure you understand the type of beneficiary you will assign to your designated beneficiary. Seek the help of your insurer to help you know the beneficiary in your policy. Sometimes, these beneficiaries are usually not given so much thought by those who are to purchase the life insurance policy. Remember, this beneficiary is the one who will benefit from your hard-earned money in paying your premium. Make sure your beneficiary is worth receiving this amount of money not just because your beneficiary is blood-related but because your beneficiary deserves it.