Certainly life insurance policies allow for more than one beneficiary. Here is the thing to keep in mind, almost all life insurance companies deal in percentages versus amounts. For example if you have three beneficiaries you cannot leave equal amounts. The percentages would be 33.3333%. You would have to make one of the three 34% and the other two beneficiaries as 33%.
Absolutely. It is not at all uncommon for a person who takes out a life insurance policy to name multiple beneficiaries on the policy and to apportion what amount or percentage of the life insurance proceeds should go to each beneficiary. It is also common to have what are referred to as primary and contingent beneficiaries named on the policy. This is to address the possible situation where the primary beneficiary named at the time the policy is issued passes away before or at the same time as the policy holder (think of a husband and wife being killed at the same time in a car accident for instance). In this situation, if the policy holder received good advice from their insurance agent then the policy proceed would be paid to the contingent beneficiary rather than possibly getting tied up in the probate process in dealing with the deceased person's estate.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
The beneficiary on a life insurance policy can be almost any arrangement of people. Whoever the owner wants to receive benefits can be the beneficiary. When the beneficiary is going to be particularly complex it is probably best to have a trust drawn up by an attorney to clearly identify the disposition of the money.
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
Of course! You have the option to put on primary beneficiaries, contingent beneficiaries (in case the primary predeceases the insured), and even tertiary beneficiaries if you'd like (in case the primary and contingent beneficiaries predecease the insured). Each level (primary, contingent, and tertiary) can have more than one beneficiary.
You also want to make sure to designate what happens to a beneficiary's share if he/she predeceases the insured (especially if there is more than 1 beneficiary - e.g. does it go to the other beneficiary? to the estate? to someone else? etc.)
The other thing you want to make sure of is that the policy structure does not violate the "Goodman Triangle" (named after a court case). The Goodman Triangle, in short, states that 2 of the 3 parties of a life insurance contract must be the same to avoid certain tax consequences (same owner and beneficiary with a different insured or same owner and insured with a different beneficiary).
If you want to place more than one beneficiary on the policy, the owner and insured would have to be the same person to not violate the Goodman Triangle.
When the Goodman Triangle is violated, the situation can result in the monies being subject to estate taxes or gift tax consequences.
If a policy is owned by a trust such as an Irrevocable Life Insurance Trust (ILIT), the insured and beneficiary will be the trust and the insured will be the person who's life the trust was created for. The trust would illustrate all of the payout structure scenarios when the insured dies and a claim is made on the policy.
I hope the information is helpful - please feel free to contact me for assistance with your coverage and if you have any further questions. Thanks very much.
Recruiter/Manager, Cole Insurance Investments, Charlotte N.C.
Yes you can have more than one beneficiary on a life policy there are usually three on the application you also can do an attachment be careful at this because it's not good to spread things to thin so you should think about a will or living trust at this point this could cause family strife in case of death and that is the last thing we would want to see. Seek a financial planner it will be well worth the time spent. See my profile if you should need help.
That is a great question! There is no limit upon who or how many beneficiaries that you would like to have on your policy. The only stipulation in many cases is that they not be minors. If that is the case for you, then be sure that there is a legal guardian named, or a trust set up for them, until such time as they are legally able to access the funds. I hope that helps, thanks for asking!
President, The Firm of Steven H. Kobrin, LUTCF, 6-05 Saddle River Rd #103, Fair Lawn, NJ 07410
This is a very interesting question because life insurance carriers allow for a lot of flexibility in beneficiary designations.
For example, you have the primary beneficiary. This person (or entity, such as a corporation or trust) will get the money when the insured dies.
What if I unfortunately the primary beneficiary is not alive (or in business) when the insured dies?
That is why you can designate a contingent beneficiary. This beneficiary will get the money in those exact circumstances - when the primary beneficiary is not available.
What if you wanted to name multiple primary or contingent beneficiaries? That can be done. Do they have to get equal shares? No. As a matter of fact, especially when the contingent beneficiary is children, parents often do not apportion the benefit equally.
What if you want to set up successor beneficiaries along bloodlines? Such as your child, but if your child is not available, then your child’s child? This can also be done. Make sure you discuss this with your estate planning attorney.
What if you want to make the beneficiaries minors? Not a good idea. An insurance company will not release money to a minor. You will need to do some estate planning to secure that money.
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You also want to make sure to designate what happens to a beneficiary's share if he/she predeceases the insured (especially if there is more than 1 beneficiary - e.g. does it go to the other beneficiary? to the estate? to someone else? etc.)
The other thing you want to make sure of is that the policy structure does not violate the "Goodman Triangle" (named after a court case). The Goodman Triangle, in short, states that 2 of the 3 parties of a life insurance contract must be the same to avoid certain tax consequences (same owner and beneficiary with a different insured or same owner and insured with a different beneficiary).
If you want to place more than one beneficiary on the policy, the owner and insured would have to be the same person to not violate the Goodman Triangle.
When the Goodman Triangle is violated, the situation can result in the monies being subject to estate taxes or gift tax consequences.
If a policy is owned by a trust such as an Irrevocable Life Insurance Trust (ILIT), the insured and beneficiary will be the trust and the insured will be the person who's life the trust was created for. The trust would illustrate all of the payout structure scenarios when the insured dies and a claim is made on the policy.
I hope the information is helpful - please feel free to contact me for assistance with your coverage and if you have any further questions. Thanks very much.
For example, you have the primary beneficiary. This person (or entity, such as a corporation or trust) will get the money when the insured dies.
What if I unfortunately the primary beneficiary is not alive (or in business) when the insured dies?
That is why you can designate a contingent beneficiary. This beneficiary will get the money in those exact circumstances - when the primary beneficiary is not available.
What if you wanted to name multiple primary or contingent beneficiaries? That can be done. Do they have to get equal shares? No. As a matter of fact, especially when the contingent beneficiary is children, parents often do not apportion the benefit equally.
What if you want to set up successor beneficiaries along bloodlines? Such as your child, but if your child is not available, then your child’s child? This can also be done. Make sure you discuss this with your estate planning attorney.
What if you want to make the beneficiaries minors? Not a good idea. An insurance company will not release money to a minor. You will need to do some estate planning to secure that money.