10 Ways to Avoid Mistakes when Naming Life Insurance Beneficiaries

Designating life insurance beneficiaries can be tricky andmistakes are common.  Here are 10 thingsyou can do to avoid making any mistakes when naming life insurancebeneficiaries:

1. Instead of naming a minor child, name a trust ora reliable adult for the child’s benefit.
2. Don’t risk making a dependent ineligible forgovernment benefits.
3. Have your spouse sign a waiver if designatingsomeone other than your spouse in a community-property state.
4. Make sure the life insurance death benefits arenot counted as a taxable gift.
5. Don’t assume your will trumps the life insurancepolicy.
6. Don’t forget to change the designatedbeneficiaries when circumstances change.
7. Choose the distribution method that matches yourintentions.
8. Make sure the beneficiaries know they arebeneficiaries.
9. Consider having the policy paid out ininstallments.
10. Name secondary and final beneficiaries toprevent the benefit from going into your estate.

See Naming LifeInsurance Beneficiaries: 10 Ways to Screw Up, Fox Business, May 22, 2013.