The primary goal of a life insurance policy is to secure the financially dependent members and all our loved ones against any financial problems in your absence. This makes it incredibly important to assess who are the people whom you would like to name as beneficiary while getting an insurance policy. Let’s start with understanding who is a beneficiary from an insurance point of view.

Who is a beneficiary?

A beneficiary is a person who is nominated to get all the amount of your insurance coverage in the event of your death. You must take great care in deciding who your beneficiary will be to make sure that the one who needs it the most gets it. Here are a few examples of beneficiaries that will help you to decide when you nominate someone in your life insurance plan.

Dependent people

Most of our families constitute members that are partially or wholly financially dependent on the earning members of the family. This could be your parents who are living on some small pension amount or your kids or spouse who are not earning. People who will suffer the most financial problem in your absence are the ones who deserve your insurance money. You will have to assess the dependent people who have nowhere to look but you for their every financial need.

For debt guarantors

The consumerist lifestyle has brought with it the need to borrow loans to buy things. We all deserve to lead a luxurious life, and most of us end up borrowing loans to do that. If you end up borrowing a significant amount of credit you might have to nominate a few guarantors. Hence, this makes it incredibly important to insure yourself with a policy that will pay off your debt in the event of your untimely death.

Divide the share

If you are the only earning member of your family, you may have more than one financially dependent person. In such circumstances, the policyholder falls in a dilemma as to who shall be the one to receive his claim amount. In such a family setup, the policyholder must divide the share of his claim amount among dependent members.

Nominating a wrong beneficiary will forfeit the sole purpose of a life insurance policy. The best way to make this decision is to talk to your family members and the people who are dependent on you and understand their needs and expectations from you.

Learn more about our online life insurance plans.

DISCLAIMER

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.



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