Group and Private Insurance

A life insurance beneficiary is a person or entity that is eligible to receive death benefits when the insured party dies. There are several types of beneficiaries. These types of beneficiaries include primary beneficiaries, contingent beneficiaries and irrevocable beneficiaries.

Primary Beneficiary

Primary beneficiaries compose the class of persons or entities that is first in line to receive benefits. This is typically a spouse or a child, but it can also be a company.

This class can consist of more than one person. A father might name his two children as primary beneficiaries to receive equal percentages of his life insurance proceeds.

The amounts that the primary beneficiaries receive do not have to be equal. A father might name a business partner as of his beneficiaries in order to clear a debt. The business partner might receive a flat amount and the remaining beneficiaries might receive a percentage of the remaining amount.

Contingent Beneficiary

Contingent beneficiaries are second in line to receive the proceeds of a life insurance policy. The contingent beneficiaries can only receive benefits if all of the members of the primary beneficiary class have predeceased the insured person.

Revocable Beneficiary

A revocable beneficiary can be replaced by another beneficiary at a later date. So long as the insured is still alive the owner can change the person or persons who are named as a beneficiary

Irrevocable Beneficiary

An irrevocable beneficiary cannot be changed one named.

Beneficiaries are typically of the revocable variety. However where there are concerns about estate taxes, irrevocable beneficiaries are sometimes named. Estate tax issues are beyond the scope of this blog post, but may be covered in a future post.

Life insurance pricing is typically unaffected by the choice or type of beneficiary chosen. This is the case whether you are purchasing a cheap $5000 life insurance for a typical senior citizen or a $5,000,000 policy for millionaire.

It is important to be thoughtful about naming your beneficiaries. Giving money directly to a minor child could have unintended consequences.

It is also important to update your beneficiaries should certain events occur. Failing to update your policy after a beneficiary has passed away or after a divorce could result in the wrong person or people receiving your life insurance proceeds.

If your policy does not have a beneficiary because your named beneficiary predeceases you, your life insurance proceeds can become part of your estate. This could subject your life insurance proceeds to unnecessary taxation.

Buying a guaranteed issue life insurance policy has its pros and cons. These life insurance policies are not the best option for most people. Buying the wrong type of policy can cost you more than it should.

You will probably pay less and get a better policy if they purchase a standard or medically underwritten policy. Even if you take a few medications or have some medical conditions, you should consider guaranteed issue life insurance, no exam life insurance and simplified issued life insurance only after you have been denied a standard policy. These policies are almost always more expensive.

Most people qualify for less expensive medically underwritten policies. “Regular” or medically underwritten life insurance is relatively easy to qualify for. Even if you have been denied coverage for health insurance or disability insurance, you are probably healthy enough to qualify for a medically underwritten life insurance policy.

When you apply for a life insurance policy and are asked about your medical history, the company will assign you to a rate class. You may qualify for a preferred rate. You may qualify for a standard rate. You may be charged a rate that is higher than the standard rate.

Even the highest rate is likely to be lower than the rate you would pay for a guaranteed issue policy. By answering a few medical questions and you may pay half the price for the same amount of coverage.

Other Negatives of Guaranteed Issue Life Insurance

Guaranteed issue life insurance often has other negatives. You may get hurt in several ways. The most obvious is the monthly premium. The areas where they “get you” are the cash value and the time it takes to qualify for the death benefit.

Some life insurance policies will build cash values that you can borrow against or receive if you decide to terminate the policy and cash it in. The cash values in a medically underwritten policies will tend to build up much faster than for comparably priced guaranteed issue life policies.

Many if not most guaranteed issue life policies are modified benefit policies. This means that the full death benefit isn’t paid if the insured dies too soon.

The insured’s family may only receive a small percentage of the death benefit if the insured dies in the first few years after taking out the policy.

Life Insurance Recommendations

If you do not have a major medical condition, you should simply shop around for the best life insurance policy and apply for it. Do not consider any of the guaranteed issue policies.

If you have a significant medical issue, you should still look at underwritten policies first. You can always apply for a guaranteed issue policy afterwords if you get denied.

Guaranteed issue life insurance policies have been made to look attractive by some good advertising campaigns. These campaigns have strongly implied that it is very hard to medically qualify for other types of policies. That simply isn’t true.

Be sure to exhaust your options with cheaper policies before considering any policy that guarantees your acceptance. There is a good chance that you will qualify for a life insurance policy that is not only cheaper but better.

You can buy cheap senior citizen life insurance by requesting information from our site. In fact, there are special policies for seniors who have serious medical conditions as well as policies for those in good health.

If you do have a serious medical condition your life insurance broker may advise that you purchase a modified benefit policy. These policies typically only pay the full death benefit if the insured dies after the policy has been in force for two or three years. If an insured dies before then, paid premiums will probably be refunded.

Many seniors and their families benefit from these types of policies. They are easy to qualify for. No exam is needed. However, there are many who are healthy enough to purchase an underwritten policy that purchase modified benefit plans.

If you do not have a serious health condition, you will probably do much better with an underwritten life insurance policy. No exam life insurance is more convenient, but is much more expensive than life insurance policies where medical questions are asked.

If you are looking to buy cheap senior citizen life insurance,  make sure that you rule out plans that require an exam before you take the easy (and more expensive) route and purchase a no-exam required life insurance policy.