Naming Children As Your Beneficiaries
Naming your children as life insurance beneficiaries might seem like a sensible decision. But if you die while theyre still minors, they might not receive the funds until they reach the age of majority, usually 18. A delay can be frustrating, especially if your child needs the death benefit to cover immediate living expenses.
There are ways to get around this issue and ensure your children have access to the death benefit without waiting to reach the age of majority:
Appoint a guardian
Many states allow legal guardians to receive payouts on behalf of minors. You can appoint a legal guardian prior to your death, or the guardian can petition for rights after you die. In either case, the state must grant the guardian legal rights to manage the childs finances. Appointing a guardian can be a lengthy and expensive process, so consult with a lawyer before proceeding.
Establish a trust
Trusts can be effective solutions for leaving money to children. You can set up a life insurance trust for your children and have the trustee oversee the funds and distribute the money according to your wishes. However, there are costs involved, and the trust must be valid and active at the time of your death.
The Role Of The Representative Payee
As a payee, you play a vital role in serving our beneficiaries. You decide how to spend benefits to help create a stable living environment for the beneficiary and ensure that the basic current needs of food, shelter, clothing, and medical care are met.
Once current needs are met, you must save any leftover funds for the beneficiarys future use.
Also, to the extent possible, you should:
- Help motivate a beneficiary to work toward more independent living
- Support a beneficiary in their therapy and rehabilitation and
- Encourage the beneficiary to improve their relationship with family members.
At least once per year, we will ask you to report on how you used or saved the benefits you received. Therefore, you must keep records of deposits and expenses for each beneficiary you serve.
Important: Having power of attorney, being an authorized representative, or having a joint bank account with the beneficiary is not the same as being a payee. These arrangements do not give you legal authority to negotiate and manage a beneficiarys Social Security or SSI payments. For that, you must apply to SSA and be appointed as a payee.
Not Being Specific When It Comes To Naming Beneficiaries
If you have specific people, organizations, or even conditions for how your policy or plan’s money is to be doled out, then now is the time to put it in writing.
People often make the mistake of not being specific enough when naming beneficiaries. For example, do you have more than one child or children from a previous marriage? Then don’t name your beneficiaries simply as my children. Instead, list their legal names and Social Security numbers if you have them. Leaving money to a charitable organization? Then list the organization’s name, address, and tax ID number.
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Contact The Deceaseds Financial Advisors
Anyone who advised the deceased on financial matters or helped themmanage their estate â such as an accountant, attorney, financial planner, banker, or business partners â might be able to track down their insurance policy, or at least tell you which company they purchased the policy from.
What Happens If I Don’t Name A Beneficiary
If you dont designate a beneficiary, it may be unclear who is entitled to the funds, which can delay the benefit payment.
For retirement accounts like a 401, if you die without a beneficiary named, your assets will likely be held in probate a legal process where a court has to sort out your financial situation and determine how to distribute your assets.
Most life insurance policies have a default order of payment if you do not name a beneficiary. For many individual policies, the death benefit will be paid to the owner of the policy if they are different than the insured person and still alive, otherwise it will be paid to the owner’s estate. For group insurance policies, the order typically starts with your spouse, then your children, then your parents, and then your estate.
If there is no default order specified in your policy, the payout may be paid to your estate, or may also be held in probate.
In either case, the probate process can be lengthy and complicated, and it may take years before your loved ones can access your assets which can be avoided if you designate them as beneficiaries.
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When A Family Member Dies
We should be notified as soon as possible when a person dies. However, you cannot report a death or apply for survivors benefits online.
If you need to report a death or apply for benefits, call 1-800-772-1213 . You can speak to a Social Security representative between 8:00 am 5:30 pm. Monday through Friday. You can also visit your local Social Security office. An appointment is not required, but if you call ahead and schedule one, it may reduce the time you spend waiting to speak to someone.
Talk To Your Beneficiaries
First things first, you have to tell your beneficiaries about your policy.
Whats the purpose of a life insurance policy? To provide financial protection for your loved ones your beneficiaries after youre gone.
Life insurance is unique because often the person who purchases the policy is the insured . And the insured doesnt file a claim . Instead a beneficiary or informant files the claim.
If youre the insured and policyholder, make sure your beneficiary is aware of your life insurance policy. Even just the name of the insurance company is helpful, but you should try to give them more information, like your policy number and how to contact Bestow. You should also make sure we have your beneficiarys current contact information.
If youre the beneficiary, keep this information somewhere safe. Youll need to save this information for the next decade or more!
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Misapplication Of Dedicated Account Funds
As payee, you must keep records on how you used and saved the monthly benefits you received on behalf of the beneficiary. In addition, when you are managing a dedicated account, you must keep separate records of all funds held in, and withdrawn from, the dedicated account. This includes receipts for all the items and services you purchased with these funds.
If you have any questions about dedicated accounts, contact your local Social Security office.
More Information On Identity Theft
If you believe one of your clients has been a victim of identity theft, go to SSAs online pamphlet, Identity Theft And Your Social Security Number , and follow the instructions. Contact us if you think someone is using a clients Social Security number for work purposes.
The Federal Trade Commission is the lead government agency on identity theft issues. For more ideas on preventing identity theft and to learn what else you can do if identity theft occurs, visit www.ftc.gov/idtheft.
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Fee For Service Payees
While most payees are not eligible to receive payment for being payee, the law allows payment of a fee for payee services in very limited circumstances.
To qualify to receive a fee, your organization must be a:
- State or local government agency with responsibility for income maintenance, social service, health care, or fiduciary duties or
- Community-based, nonprofit social service organization that is bonded and licensed in the State in which you serve as a payee.
In addition, your organization must:
- Regularly serve as a payee for at least five beneficiaries
- Not be a creditor of the beneficiary
- Obtain a SSA-445 , in person, from your local SSA office and submit it to us and
- Receive written authorization from us prior to collecting a fee.
We may grant an exception to the creditor restriction on FFS payees when:
- The goods or services that create the creditor relationship meet the current needs of the beneficiary. For this exception to apply, these items must be for the immediate needs of the beneficiary, such as food, clothing and housing and
- The cost of the goods and services provided by the organization are equitable. This means that the amount the organization charges the beneficiary for its services is consistent with rates charged other individuals and is reasonable for the services provided.
Can I Name My Under
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:
- keeping careful records of all dealings with the money
- investing the money as required by a court-approved management plan
- passing the accounts before the courts on a fixed schedule and
- transferring all of the money to the children at age 18.
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.
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Life Insurance And Annuity Proceeds
An insurance policy or annuity is a contract between the company that sold it and the person who bought it. As a result, the proceeds don’t go through the probate process , and the executor isn’t in charge of them. It’s common for the policy beneficiary, not the executor, to deal with the insurance company and collect the benefits directly. But executors may be called upon to help beneficiaries claim the payments they’re entitled to.
Proceeds from life insurance policies can provide quick and welcome income for surviving family members after a death. The beneficiary will probably want to get the claim process started as soon as possible. You’ll want to find out the answers to the following questions:
- What type of life insurance policies — term, whole life, or variable life — did the deceased have?
- Was there any credit insurance or mortgage insurance ?
- Were the policies still in force at the time of death?
- Who are the beneficiaries?
- How much will the company pay?
If more than one adult beneficiary was named, each should submit a claim form. If the primary beneficiary died before the policyholder did, then the alternate beneficiary can claim the proceeds. An alternate will need to submit the death certificate of the primary beneficiary in addition to the death certificate of the policyholder.
Choosing The Policy Type That Is Right For You
Most people find that their life insurance needs change over time. So, the type of policy that is right for you is really that one that is right for you based on your current needs. People typically start by deciding between a term life policy or a permanent policy. If you need a policy to cover you for a specific period of time, then a term policy will be right for you. Many young professionals choose this option. They select a policy that will cover them during their working years or until their children reach an age where they are likely to be able to take care of themselves. A policy like this can help replace your income, pay a mortgage, and maybe even pay for college tuition for your kids in the event of your death. Term policies are usually much cheaper than permanent policies.
If you prefer a policy that will cover you for your lifetime and build cash value, then a permanent policy might be for you. You should know that permanent policies usually do not provide both a death benefit and the policys cash value. In the event of your death, your beneficiaries will receive the death benefit, not the cash value of the policy. These policies are usually much more expensive, and the higher premiums are often not worth the investment.
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Beneficiaries With A Drug Addiction Or Alcohol Condition
A beneficiary with a drug or alcohol addiction may have difficulty handling his or her own funds in a responsible manner. As in the case of every other beneficiary, we will determine, on a case-by-case basis, if they need a payee.
If we decide a beneficiary with a drug or alcohol addiction is incapable of managing their funds, we will select a payee for them. In these cases, we often select as payee an organization or agency experienced in serving individuals with addictions since these are often in the best position to know these individuals special needs.
What Is Insurable Interest
Selecting a beneficiary should not be a difficult decision. The main thing that you need to keep in mind is that a person needs to have an insurable interest. It is one of the factors companies are looking for when reviewing ones application for life insurance.
Most simply put, the beneficiary must suffer some form of financial loss of your death. Some of the most common examples of people named as beneficiaries are spouse, child, fiancee, etc. The same rule applies when selecting a foreign national as a beneficiary to your U.S. life insurance.
Tom is supporting his family in Mexico by sending them money. If he passes away, the transfers will stop and his family will suffer financial hardship. This constitutes insurable interest. In many cases, a simple note to the underwriting department explaining why naming this particular person as a beneficiary is helpful.
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Life Insurance: What Is It & How Does It Work
Most people have heard of life insurance before, but many have no idea how a life insurance policy actually works. Life insurance is an integral part of financial and estate planning for most people. It helps to protect loved ones after someones death by providing a financial payout to help with funeral costs and other expenses. While almost everyone could benefit from life insurance, not everyone decides to purchase it. This could be due to the fact that they think it is more expensive than it really is or they just dont fully understand how it works. Some people do not even realize that there are many different types of life insurance policies, so finding the one that is right for your situation is critical to protecting your family. Keep reading as we explain what life insurance is and how it works.
Life Insurance Identity Theft Scam
A life insurance identity theft scam may be used to steal your personal information and commit life insurance fraud. Life insurance fraud is a $70 Billion crime per year and identity theft is a big part of the scam. Life insurance identity theft is just one type out of many identity theft scams to steal people’s information and execute a variety of fraud schemes. But, life insurance fraud inherently offers the highest fraud cost per each fraud incidents when compared to all other types of identity theft.
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What Do You Need Beneficiaries For
Beneficiaries are listed for life insurance policies, wills, retirement accounts like 401s, IRAs, and annuities.
For example, a life insurance beneficiary receives the money from your life insurance policy. This payment can help your loved ones pay for your funeral, or it could be your way of leaving a financial gift.
In a will, a beneficiary could be the person you choose to take over the family farm or who gets your house in the event of your death.
How To Obtain Life Insurance Without A Social Security Number
We outline the steps below on how to purchase life insurance without a social security number.
The application and underwriting requirements really depend on your situation.
However , in general, here are the steps to obtain life insurance without a social security number.
We discuss these steps in more detail next.
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Why Would A Person Need My Social Security Number To Leave Me An Inheritance
- Posted on Sep 10, 2016
First, please let me express my condolences in the loss of your aunt. Attorney Robinson has provided you a great wealth of important and useful information. I would add only that you might want to contact the Probate Office in the County in Illinois where your aunt died and request copies of any Will and all Accountings filed in the Estate. There will be a nominal charge for this. The Probate office can tell you how much to send and to what address.
What Is The Average Life Insurance Payout
It is difficult to find data on average life insurance payouts, although it seems that the average in the United States is somewhere around $100,000. Some policies pay much less than this. In some cases, you might find that a policy has a death benefit as low as a few hundred dollars. However, you also have the other end of the spectrum. Some policies might pay as much as several million dollars upon the death of the insured. It just all depends on the specifics of your policy.
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