When it comes to life insurance, choosing the right beneficiary is just as important as selecting the right policy. Your choice ensures your loved ones—or your business—receive the support they need when you’re no longer around. While there’s no one-size-fits-all answer, this guide will walk you through the best options based on your personal goals, family dynamics, and professional commitments.
Spouse or Domestic Partner
For most people, naming their spouse or domestic partner as the primary beneficiary makes the most sense. It helps ensure that the person most likely dependent on your income or emotional support is financially secure. According to Thrivent Financial (2023), this is the most common—and often the most practical—choice.
Children and Trusts
If you have minor children, naming them directly as beneficiaries may seem logical—but it’s not recommended. Since children under 18 can’t legally manage life insurance proceeds, the better option is setting up a trust or naming a legal guardian. A trust can also help avoid probate and ensure the funds are used responsibly for education and living expenses. Vitality and Bankrate both highlight this strategy as a smart move for young families.
Other Family Members
If your spouse or children aren’t your primary dependents, consider naming parents, siblings, or other close relatives who rely on you financially. This approach can be especially relevant for unmarried professionals or those supporting extended family members. As mentioned by TruStage, this is becoming more common in multi-generational households.
Trusts and Estate Planning
For more control over how your life insurance proceeds are distributed, naming a trust is a powerful tool. It helps ensure money goes exactly where it’s intended—especially if you’re supporting someone with special needs or managing significant assets. Trusts also provide privacy and tax efficiency, according to Legal & General.
Charitable Causes
If you’re passionate about a particular nonprofit or cause, you can name a charity as a beneficiary. This option leaves a lasting legacy and is often used by those with no close dependents or those who want to make a meaningful impact after their lifetime. Life Happens suggests using this approach as either a full or contingent beneficiary.
Friends or Business Partners
Naming a close friend or business partner is less common but perfectly valid—especially if that person would face financial hardship due to your absence. Just be sure the relationship is strong and long-term. This can be a smart move for entrepreneurs and co-founders in small businesses.
Who Not to Name as Your Life Insurance Beneficiary
Choosing the wrong beneficiary can lead to legal and financial complications. Here’s who to avoid:
Minors (without a trust or guardian)
Unreliable or financially irresponsible individuals
Ex-spouses (unless intended)
Anyone not legally eligible or who could cause conflict under state law
Note: In community property states (like California, Texas, and Nevada), your spouse may have legal rights to a portion of the death benefit—even if someone else is named. Always consult your state laws or a financial advisor. Source: Forbes, 2024
Primary vs. Contingent Beneficiaries
It’s essential to name both a primary and a contingent beneficiary. The latter receives the payout if the primary beneficiary is no longer able to claim it. This prevents delays, confusion, or court involvement.
Keep It Updated
Life events like marriage, divorce, births, or deaths? Update your beneficiary list. Most insurers—like State Farm, New York Life, and Northwestern Mutual—stress the importance of reviewing your beneficiary designations regularly. Securian recommends an annual check-in to keep things current.
Best Option for a Business Development Manager at Acrisure?
As a Business Development Manager at Acrisure, you may want to consider a dual-beneficiary setup:
Primary Beneficiary: Your spouse or trust (if you have dependents or long-term financial obligations).
Contingent Beneficiary: A business trust or key partner—especially if your income or role significantly impacts your company’s success.
This hybrid structure protects both your family and your professional interests—a wise move for anyone with both personal and business responsibilities.
Important Disclaimer
Choosing the right beneficiary is a deeply personal and strategic decision. Your choice should align with your financial goals, family structure, and state laws.
This is not financial advice. Please consult with a licensed financial advisor or estate planner before making any decisions. Laws and insurance policies can vary by state and company.
Need Help Choosing a Policy or Getting a Quote in the Western U.S.?
If you’re located in the Western region of the U.S. and need help with life insurance, home, auto, or business insurance, connect with Abdul at 916-778-5979. Abdul works closely with Acrisure and can guide you in securing the right coverage tailored to your personal and business needs.