Since you are the one who owns the policy, you are able to make all the decisions for your beneficiary. Normally, many people will just name their spouse or children as their main beneficiary, but you are also able to add, or divide life insurance benefits to a number of people that you choose. You could have one, or five, it does not matter. Say that you have four children and want them each to receive life insurance benefits, if you named all four of them as beneficiaries, the benefits will be divided up equally unless otherwise stated.

The more beneficiaries on the life insurance policy the less each one will receive, unless otherwise specified. For example, you could make it so one person will receive 50%, and the rest of the beneficiaries will equally divide what is left over in the policy.

Say a policy was taken out at $150,000 upon death, and you had your two children named as the beneficiaries, they would each receive $75,000 unless you set it up differently. If you wanted one child to get $100,000 and the other child receive the remainder, that is possible. Make sure your beneficiaries know how the policy will be paid out whether it be verbally, or in your will, so there won’t be any tension between family and friends. You would have to have the policy specially set up for one person to receive a set portion of benefits, instead of it being divided equally.

You may be thinking that you can only name relatives as your life insurance beneficiary, but in reality you can choose anyone you want. You also need to know that when you leave money to loved ones that are not related to you, the government will tax them at a higher rate. With a life insurance policy, it is different than something stated in a will, life insurance benefits are generally not subject to interest tax. Money left behind in a will is subject to taxes, but at a lower rate if you were related to the deceased. So to put it simply, items or money left behind in a will are taxed, and life insurance benefits usually are not taxed in that manner.