Who Can Collect The Life Insurance Benefits Of A Deceased?
Obtaining a life insurance plan assures you that your heirs will receive a prearranged
sum of money when your death comes within the span of the contract terms. The insured has the freedom to alter the name of designated beneficiaries of the policy any time he asks to and they are free to appoint innumerable number of individual as his recipients. The insurance company will only grant the proceeds of the life insurance to the people who are listed as the policy owner's beneficiary, unless prearranged by the court to be dispensed in a different method.Primary Beneficiaries
Individuals that are appointed as primary beneficiaries are the first choice beneficiary of the insured. The primary recipients will get the chance to receive a considerable amount of money at the time of the policy holder's death regardless of the presence of contingent beneficiaries. In case the insured designated multiple names of beneficiaries yet not all of them are still exist at the time the policy holder died, the part of the proceeds allotted for the deceased primary recipient will be evenly divided between the remaining primary beneficiaries.
Contingent Beneficiaries
Life insurance policy holders may select some individuals as their contingent beneficiaries. A contingent beneficiary can receive a death benefit proceeds in case the primary beneficiaries die, did not qualify to claim the payment or not interested to collect the life insurance benefits. Even so, contingent beneficiaries will not obtain a single cent in case any primary beneficiary is still alive.
Minors as Beneficiaries
Problems usually rise when the receiver of a life insurance plan are minor children. Even if the names of the kids are officially designated as primary beneficiaries of the policy, no insurance carriers will disburse the proceeds to individuals that are under legal age. In case an official will does not exist, the issue will be brought to the courts. A judge will elect a legal guardian of the minors to take care of the account and manage the funds until the receiver reaches his legal age to take the duty of managing their accounts. This situation can be unfavorable and disadvantageous for all the parties involved especially if the designated guardian is a stranger, not to mention the danger of providing the minor a considerable amount of money even at their very young age.
Trusts
Trusts are normally appointed to evade the knotty and complicated circumstances that may take place if the policy owner's only receivers are minor children. A trust can be elected as either a primary or contingent beneficiary. The specifics as to the period and manner the children can get the funds can be designed and arranged ahead of time. Furthermore, the insured has the opportunity to assign a reliable person that can grant their requests even if they already departed.
Disputing Beneficiaries
Life insurance companies are compelled to give out the death benefits to the appointed recipients as specified by the policy owner. Insurers do not have the power to choose which recipients to pay nor have the authority to modify the terms of the appointment of recipients. Only a court can order an insurance company to grant the benefits in a method other than what was preferred by the insured. Disputing life insurance beneficiaries can be a difficult, complicated and often a futile procedure. Keep in mind that policies are legal contracts that bind the policy owner and the company. Thus, changing the stipulations in the contract requires strong demonstration to a court that the selection of the recipient was modified under force or intimidation.
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