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Planning vital to insurance strategy

Life insurance can be a valuable tool for individuals and businesses. It may be used to insure the economic value of a person's future earnings, to pay for needs or obligations arising from death (such as estate taxes), to redeem a shareholder's interest in a corporation or to fund a charitable bequest.

Choosing the appropriate beneficiary designation is a vital part of insurance planning.

For example, the correct designation should be planned to minimize estate taxes paid on insurance proceeds. In addition, the policy owner can avoid family conflicts by carefully naming beneficiaries. The naming of an immature beneficiary could also result in the mismanagement and misuse of insurance proceeds.

The beneficiary designation lets the owner name the recipient of the insurance proceeds. The beneficiary, not the decedent, controls who receives the death benefit proceeds.