While you may consider your pet part of the family, you unfortunately can’t name your pet as a life insurance beneficiary. You can, however, make sure your furry friend is taken care of if anything were to happen to you. Learn more about the importance of purchasing a life insurance policy and how all members of your family can benefit from it.
What is a death benefit?
Also referred to as the face amount, a death benefit is the amount a life insurance policy will pay to the beneficiaries when the insured passes away. There are a variety of ways in which your beneficiaries can receive the death benefit during the life insurance payout process.
Why You Can’t Name Your Pet as Your Life Insurance Beneficiary
While it might sound endearing to name your pet as a life insurance beneficiary, you’re unable to do so because they can’t partake in the necessary processes of being named a beneficiary or partake in simple acts such as opening a bank account. Life insurance beneficiaries have to be able to sign documents and file death benefit claims, which are two more reasons an animal cannot fulfill that role.
How-To Make Sure Your Pet is Still Cared For After You’re Gone
While it isn’t possible to name your pet as a life insurance beneficiary, there are other ways for your pet to benefit from your life insurance policy.
Name Your Pet’s Caretaker as Your Beneficiary
If you have someone who would already be taking care of your pet if anything were to happen to you, then naming your pet’s caretaker as a beneficiary is an easy way to make sure your pet is taken care of after you’re gone. The caretaker will need money for food, veterinary care, medicine and more and you can designate a certain amount or percentage of the death benefit to go toward these expenses.
Set Up a Pet Trust
Setting up a trust for your pet is another way to make sure the death benefit is dispersed the way you want it to be. As a legally binding financial plan, a trust for your pet allows you to designate how much money will be received and what the money will be used for.
Consider Your Pet’s Guardian
Whether you have a life insurance trust or want some of your policy’s death benefit to go toward your pet, you’ll have to name an official guardian to accept the funds and take care of your pet after you pass away.
What’s the difference between pet trusts vs. life insurance death benefit?
A life insurance death benefit is what insurance companies will pay beneficiaries after you pass. A trust lets you plan ahead and have complete control over how the money is paid and used after you’re gone. Additionally, a trust allows you to name a minor or a pet as a beneficiary.
What Else to Know About Choosing a Life Insurance Beneficiary
Choosing a beneficiary for your life insurance policy is likely one of the main reasons you bought your policy in the first place. There’s a lot to consider when choosing, including who can be a beneficiary, the ways in which they can receive the death benefit, tax implications, and having a contingent beneficiary. Make sure you’re thoroughly considering all of these options when deciding not only who is the right beneficiary, but who will take care of your beloved pet if you’re unable to do so.
SelectQuote Can Answer Your Life Insurance Beneficiary Questions
Life insurance is a great way to make sure your loved ones—including your pets—are financially taken care of should something happen to you. At SelectQuote, we make understanding your life insurance options easy. We’ll answer any questions you have and make sure you have a policy that provides peace of mind for you and your loved ones.