3 Ways To Protect Your Children's Best Interests When Taking Out A Life Insurance Policy

Life insurance is not a top priority for most Americans. In fact, less than 4 in 10 Americans polled have even expressed a concern regarding taking out a life insurance policy under their name. While ideally you'd live to a ripe, old age, it's important to expect the unexpected – especially if you have children. Taking out a life insurance policy will help make sure that your children will be financially set and taken care of should anything happen to you. Here are 3 tips you should keep in mind when taking out a life insurance policy.

Name Them as Contingent Beneficiaries

While your spouse will likely be the primary beneficiary of your life insurance policy, you never know what would happen should both you and your spouse get into an accident together. In order to make sure that your children will definitely receive the financial support needed from your life insurance policy, make sure to name them as contingent beneficiaries.

Contingent beneficiaries will not receive any of the life insurance proceeds if the primary beneficiary, or your spouse, is still alive; however, in the event that the primary beneficiary dies, the contingent beneficiaries will receive the proceeds of your life insurance policy. If your children are underage, you might want to appoint a legal guardian or – better yet – set up a trust.

Choose Plans that Allow for Revocable Beneficiaries

There are two classes of beneficiaries: revocable and irrevocable. Life insurance policies with revocable beneficiaries are generally considered to be a better option. Most people appoint their spouse as the primary beneficiary; however, not all marriages last.

You want to give yourself the option to change who the beneficiary of your life insurance policy may be down the road in the event that you and your spouse divorce, at which point, you and your spouse may no longer see eye to eye. If you purchase a life insurance policy with a revocable beneficiary, you can change the beneficiary designation at any time without the consent of the original beneficiary; however, if you purchase a life insurance policy with an irrevocable beneficiary, you won't be able to do so without the consent of the original beneficiary.

Save yourself the headaches associated with complicated legal issues by paying extra for a policy with a revocable beneficiary. This way, you won't need anyone's approval should circumstances change down the road.

Designate Percentages Rather than Specific Dollar Amounts

Most life insurance policies will grow with time. If you have more than one primary or contingent beneficiary listed, you definitely want to designate percentages rather than specific dollar amounts of the proceeds to each beneficiary. If you designated specific dollar amounts, distribution of the growth in the proceeds can be contested by the beneficiaries. By designating percentages, you can rest assured that no one can contest how the proceeds will be divvied up.


Speak to a life insurance agent regarding your concerns in order to make sure that the terms and conditions of your policy are worded in a way that will protect the best interests of your children. While most Americans don't prioritize taking out life insurance policies, this type of insurance can be a lifesaver for your children should anything happen to you. Start getting life insurance quotes and taking action today.