We know that it is very important to have life insurance. This gives a lot of protection and financial assistance to loved ones when the policy owner passes away, not to mention the peace of mind it can provide, knowing that your loved ones will not struggle financially when you die.
As an essential form of insurance, we need to know and understand who and what are involved in a life insurance policy. You’ll be allotting money for it for a long period of time so you might as well know where your money is going and how it can benefit you and your family.
When looking for different types of life insurance in Australia, you will come across components or terms such as policy owner and beneficiary.
As the name suggests, the policy owner is the one who owns the life insurance policy. From changing and/or adding beneficiaries, updating the coverage, and becoming the default beneficiary, to canceling the policy and paying premiums, the policy owner has full authority to make changes.
In a life insurance, the beneficiary is the individual who is entitled to receive the payment once the policy owner dies. There are two types of beneficiaries: primary and contingent.
- Primary beneficiary – This can be your spouse, child, and or children, person who’s in an interdependency relationship with you, or someone who is dependent financially to you.
- Contingent beneficiary – This can be one of more individuals who are also listed in the policy and will receive the life insurance payment if the primary beneficiary/ies die/s before the life insured.
Take note that if the beneficiary is a minor, you need to assign a guardian or trust to get life insurance funds. Also, a policy owner can have several primary and contingent beneficiaries and indicate the percentage each will receive. This enables the policy owner to fully control where the money will go
With several factors to consider, it is important to take time to research and understand the components of a life insurance. Compare your options and choose what fits your needs and preferences. You can likewise seek professional life insurance advice and/or ask friends for feedback on their own life insurance. Also, choose your beneficiaries well so you don’t have to worry about your loved ones and their finances.
Do you know other things that we need to consider when it comes to life insurance in Australia? Share your life insurance advice in the comments section.Read More →