Q: What is a Beneficiary?
A: When you purchase a life insurance policy you can name a beneficiary.
A beneficiary is a person or persons who will receive the death benefit from your life insurance policy when you die. If you die without naming anyone, the money will go to your estate (the sum of all your property, possessions, financial assets and debts) by default.
When you name a beneficiary, the money does not go to your estate, but goes directly to the beneficiary.
Q: Who can be a Beneficiary?
A: You can name your spouse, children, dependents, another family member, a friend or a charity as a beneficiary. If you name more than one beneficiary, the insurance company will divide the death benefit between them. You can assign percentages of the death benefit to each beneficiary, e.g. 50% to your spouse, 50% to your children.
Q: Can I name my under-age children as beneficiaries?
A: In the Bahamas, children under the age of 18 cannot receive control over any money left to them in an insurance policy. If you wish for your child(ren) to receive the money, you will need to name a trustee. In the event of your demise, the trustee will hold the death benefit in trust for the child(ren) 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.
Q: Can I name my estate as Beneficiary?
A: If you name your estate as beneficiary, the death benefit will become a part of your estate. The funds will be used according to the terms of your will. If you do not have a will, please do not indicate your beneficiary as the ‘Estate’. It is important to note that Creditors may claim the death benefit to pay for any outstanding debts. This could result in your family receiving less money than they would if you named them as beneficiaries.
Q: How do I name a beneficiary?
A: If you wish to, you can name your beneficiaries when you purchase your policy. You may also wish to discuss your plans with your beneficiary. Within our local market, term life policies tend to have revocable beneficiaries and whole life policies have irrevocable beneficiaries. The definitions are outlined for you below:
Revocable Beneficiary: You can change the beneficiary(ies) at any time without telling them.
Irrevocable Beneficiary: You must have written permission from the irrevocable beneficiary before you can make any changes.
Ensure that your beneficiary information is up to date and reflects your wishes. It is a good practice to review your beneficiary details periodically.