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Ask An Agent: I'm Single. What Are My Life Insurance Beneficiary Options?

Published: May 2015

Allstate Agent Elizabeth Jusino

Q: "I'm single. What are my beneficiary options for a life insurance policy?"

A: Give this some careful thought and discuss it with your insurance agent, because you have many beneficiary choices, says Elizabeth Jusino, an Allstate insurance agent in Chicago.

woman overlooking lake

Do I Even Need Life Insurance?

"You just might," Jusino says. "It's smart to buy life insurance while you're young and healthy, as rates tend to be lower." Later, if you end up marrying or having children, you may be able to modify your existing policy to accommodate your needs, she says.

Also: Even if your company offers life insurance as a benefit, you may want to buy your own, additional policy. "If you leave your job, your own insurance goes with you even though the company-paid insurance doesn't," says Jusino.

Beneficiary: Your Extended Family

Jusino says while married people typically choose to name each other as their insurance beneficiaries, single people can choose to name anyone who is either related to them or who might depend on them financially.

"I always ask my single clients, 'Would your parents need financial help if you were to pass away? Would you want to help a favorite niece or nephew pay for college?'" Jusino says. "Just because they aren't living in your household doesn't mean people don't depend on you — and that's who life insurance is for."

Jusino says you may also be able to name a partner or good friend to whom you’re not married. However, Jusino says some states require unrelated beneficiaries to have a financial relationship with you (i.e. share rent or living expenses). That's known as an "insurable interest."

Beneficiary: Your Child

If you're a single parent, you probably want your child to benefit from your life insurance proceeds. The challenge: Children under age 18 can't legally receive insurance funds; the company must hold them until the child comes of age.

One option you might want to consider is naming a custodian for your child under the Uniform Transfer to Minors Act (or Uniform Gift to Minors Act in some states).

FinAid.org says this type of account doesn't require an attorney to prepare trust documents — you simply name the custodian of the account and provide your child's name and social security number. Ask your agent for help with this option as you designate your life insurance beneficiary.

Beneficiary: Your Business

Your life insurance can help give financial stability to a company you own. "You can name your business as your beneficiary, or business partners can name each other as beneficiaries," explains Jusino. "That way, if something were to happen to you, your partner could afford to buy out your share of the company, or your insurance proceeds could support your company while your heirs look for a new owner."

Beneficiary: Your Estate

Your estate can be your insurance beneficiary, Jusino says. In that case, your insurance proceeds would be distributed along with your other assets, according to how you've set up your will.

One caution, though: If you have any debts when you die, creditors could try to obtain payment from your life insurance proceeds, according to the American Institute of CPAs. In most states, creditors have no claim on your insurance proceeds when an individual is the beneficiary, the organization says.

Beneficiary: A Charity

Jusino says her younger, single clients tend to choose people as beneficiaries. However, as clients grow older, they sometimes choose to switch their beneficiaries to a house of worship, school or other organization. "That's perfectly fine. All you need is the organization's tax identification number," Jusino says.

You can also have multiple beneficiaries, Jusino notes — say, 50 percent of your insurance proceeds going to your niece and 50 percent to your favorite animal shelter.

If you later change your mind, you can easily change your beneficiaries, as long as an irrevocable beneficiary has not been named.. "I urge my clients to review their beneficiary designations once a year, just to be sure their money is going exactly where they want it to go," says Jusino.

Need help deciding on a life insurance beneficiary? Get in touch with an Allstate agent, who can help explain your options.

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Life insurance offered through Allstate Life Ins. Co. & Allstate Assurance Co., 3075 Sanders Rd, Northbrook IL 60062; Lincoln Benefit Life Co., 1221 N St. Ste 200, Lincoln NE 68508; American Heritage Life Ins. Co., 1776 American Heritage Life Dr., Jacksonville FL 32224. In New York, life insurance offered through Allstate Life Insurance Company of New York, Hauppauge NY. © 2016 Allstate Insurance Company, Northbook, IL.
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