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J.R. Prewitt & Associates
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Life Insurance Birmingham, AL

PERSONAL
  • Permanent Life
  • Term Life
  • Disability Income
  • Estate Planning
    • First-to-die
    • Second-to-die
  • Financial Planning
  • Personal Maximization
  • Retirement
  • Annuities
  • IRA Alternative
  • Long Term Care
  • Mortgage Protection
  • Major Medical / Hospitalization
  • Cancer
  • Medjet Services
  • Temporary Medical
BUSINESS
  • Key Man
  • Buy-Sell
  • Disability Income
  • Business Overhead Expense
  • Annuities
  • Pension
  • 401(k) Plans
  • Profit Sharing
  • Retirement Plans
  • Executive Benefit Plan
  • Deferred Compensation
  • Split Dollar
  • Medjet Services
  • Travel Accident
  • International Travel
EMPLOYEE BENEFITS
  • Group Life
  • Accidental Death & Dismemberment
  • Dependent Life
  • Group Disability
    • Short Term
    • Long Term
  • Group Medical
  • Fully Insured
  • Partially Self-Insured
  • Group Dental
  • Voluntary Payroll Deduction
    • Life Insurance
    • Long Term Care
    • Disability
    • Dental
  • Cancer
  • Long Term Care
  • Section 125
What is a beneficiary? 

A beneficiary is the person or entity you name in a life insurance policy to receive the death benefit.

You can name:
  • One person
  • Two or more people
  • The trustee of a trust you’ve set up
  • A charity
  • Your estate
If you don’t name a beneficiary, the death benefit will be paid to your estate. Two “levels” of beneficiaries for your Life Insurance

Your life insurance policy should have both “primary” and “contingent” beneficiaries. The primary beneficiary gets the death benefits if he or she can be found after your death. Contingent beneficiaries get the death benefits if the primary beneficiary can’t be found. If no primary or contingent beneficiaries can be found, the death benefit will be paid to your estate.

As part of naming beneficiaries, you should identify them as clearly as possible and include their social security numbers. This will make it easier for the life insurance company to find them, and it will make it less likely that disputes will arise regarding the death benefits. For example, if you write "wife [or husband] of the insured" without using a specific name, an ex-spouse could claim the death benefit. On the other hand, if you have named specific children, any later-born or adopted children will not receive the death benefit—unless you change the beneficiary designation to include them.

Besides naming beneficiaries, you should specify how the benefits are to be handled if one or more beneficiaries can’t be found. For example, suppose you have two children and you name each one to receive half of the death benefit. If one of the children dies before you do, do you want the other child to get the entire death benefit, or the deceased child’s heirs to get his or her share?

If the death benefit goes to your estate, probate proceedings could delay distributing the money, and the cost of probate could diminish the amount available to your heirs.

Choosing beneficiaries for your Life Insurance policy, and keeping those choices up-to-date, is an important part of owning life insurance. The birth or adoption of a child, marriage or divorce can affect your initial choice. Review your beneficiary designation as new situations arise in order to make sure your choice is still appropriate. Why should I buy life insurance? 

Many financial experts consider life insurance to be the cornerstone of sound financial planning. It can be an important tool in the following situations:

Replace income for dependents

If people depend on your income, life insurance can replace that income for them if you die. The most commonly recognized case of this is parents with young children. However, it can also apply to couples in which the survivor would be financially stricken by the income lost through the death of a partner, and to dependent adults, such as parents, siblings or adult children who continue to rely on you financially. Insurance to replace your income can be especially useful if the government- or employer-sponsored benefits of your surviving spouse or domestic partner will be reduced after your death.

Pay final expenses

Life insurance can pay your funeral and burial costs, probate and other estate administration costs, debts and medical expenses not covered by health insurance.

 Create an inheritance for your heirs

Even if you have no other assets to pass to your heirs, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries.

Pay federal “death” taxes and state “death” taxes

Life Insurance benefits can pay estate taxes so that your heirs will not have to liquidate other assets or take a smaller inheritance. Changes in the federal “death” tax rules between now and January 1, 2011 will likely lessen the impact of this tax on some people, but some states are offsetting those federal decreases with increases in their state-level “death” taxes.

Make significant charitable contributions

By making a charity the beneficiary of your life insurance, you can make a much larger contribution than if you donated the cash equivalent of the policy’s premiums.

Create a source of savings

Some types of life insurance create a cash value that, if not paid out as a death benefit, can be borrowed or withdrawn on the owner’s request. Since most people make paying their life insurance policy premiums a high priority, buying a cash-value type policy can create a kind of “forced” savings plan. Furthermore, the interest credited is tax deferred (and tax exempt if the money is paid as a death claim).

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Call us 205-933-9207

Serving Alabama

2146 Highland Avenue
Birmingham, AL 35205
205-933-9207
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