There are multiple reasons why people buy life insurance coverage. For most instances, though, individuals want to ensure that someone whom they love and care about will not need to struggle financially should something happen to them.
Certainly, one of the key aspects of life insurance is the named beneficiary that is listed on the policy. The beneficiary is defined as the person or entity that is named in the policy to receive the proceeds of the death benefit. A beneficiary is often a person, such as a surviving spouse or children. However, the beneficiary does not always have to be a person. A beneficiary can be a person, a trust, an estate, or a business. In any case, however, there must be an “insurable interest” in the insured.
An insurable interest exists when an insured person essentially derives a financial or other type of benefit from the continuous existence of the insured person – and conversely, then, if the insured person were to die, the beneficiary would suffer some type of financial loss. [Read more…]