Choosing a beneficiary for new parents

Becoming a parent changes your whole world. Suddenly, every decision is about more than just you — it’s about keeping your child safe, supported, and secure, no matter what the future holds.

For the protection they’ll need — even if you’re not there — you need life insurance.

Purchasing life insurance as a new parent is one of the most important financial steps you can take, and choosing the right beneficiary is a key part of that plan.

What’s a beneficiary?¹ It’s the person (or people) who would receive the financial support from your life insurance policy if something happened to you.

It sounds simple, but this decision can have long-term implications, especially when you’re thinking about your child’s future, who will care for them, and how money would be managed on their behalf. It doesn’t matter if you’re a single parent or in a co-parenting arrangement.

If all this sounds a bit much, we have you covered. We’ll walk you through what it means to name a beneficiary, who you might consider, and what legal and practical factors come into play.

Why choosing a beneficiary matters more than ever for parents

When you buy life insurance, one of the most important decisions you’ll make is your beneficiary designation. The designation chooses and names the person or entity who will receive your policy’s death benefit if something happens to you.

For new parents, this choice takes on even more meaning.

What happens if you don’t name one?

Sure, you can put off the decision for a little while longer. However, upon your passing, the money in your life insurance policy will need to go somewhere. If you haven’t named a beneficiary, your policy’s proceeds could be tied up in probate court, delaying the support your loved ones may need most.

Probate is a legal process that can take months and cause stress for your loved ones. In some cases, the money might even go to someone you didn’t intend to receive it.

That’s why skipping this step can create complications during an already difficult time.

Why it’s so important for new parents

As a new parent, your life insurance policy is intended to ensure your child has financial support for things like housing, education, and daily care if you’re not there.

By naming a beneficiary, you’re making sure that support goes where it’s truly needed. It’s a simple step, but it carries real peace of mind — not just for you but for your loved ones.

Who should be my beneficiary?

Choosing a life insurance beneficiary can feel like a big decision, and it is.

As a new parent, you’re thinking about who’s closest to you today. At the same time, however, you’re keeping in mind who can best support your child’s future if you’re not around.

There’s no one-size-fits-all answer. However, understanding your options and the potential challenges can help you make a thoughtful, informed choice.

Common beneficiary options

Many parents name their spouse or partner as the primary beneficiary. This makes sense if you share financial responsibilities or are raising children together. If something happens to you, your partner can use the life insurance benefit to continue supporting the family.

Some may consider naming a trusted family member, like a sibling or parent, especially in single-parent households.

Others choose to name a trust, which can provide more control over how and when the funds are used.

Factors to consider as a parent

Think about who would step in if you weren’t here. If your spouse depends on your income to pay the bills or care for your child, they’re likely the most practical choice. If you’re co-parenting, make sure your decision supports your child’s stability, regardless of custody or relationship status.

If you’re a single parent, you might be considering a grandparent or close friend. In this case, it’s important to talk to that person and make sure they’re willing and legally able to manage funds for your child’s care.

Avoid naming a minor directly

It may feel natural to name your child as the beneficiary, but doing so can create legal complications. Minors typically can’t receive life insurance benefits directly, which means the payout could get delayed or end up in the hands of someone the court appoints.

We’ll talk more about how to handle that in the next section. For now, focus on choosing someone who can manage the benefit responsibly and with your child’s best interests at heart.

Besides, you can make a decision now and change beneficiaries later if you feel the need to do so.

Can I name my child as a beneficiary?

This is one of the most commonly asked questions about life insurance and beneficiary designation we get asked. After all, your life insurance policy is meant to protect your child’s future. However, naming a minor as your beneficiary can create more problems than it solves.

Why naming a minor can be complicated

Legally, children can’t receive life insurance payouts directly. If a minor is listed as your beneficiary, the money could be tied up in court until a guardian is appointed.

That process can take time and lead to outcomes you didn’t intend, especially if you haven’t named a guardian in your will.

Better options for protecting your child

Instead of naming your child directly, consider naming a trusted adult, like your spouse or co-parent, as the beneficiary.

You can also create a trust and name the trust as the beneficiary. This gives you more control over how and when the funds are used, which can be especially helpful if you want the money to go toward education, housing, or other specific needs. Trust designation is a common option for both life insurance and estate planning.

Another alternative is setting up a UTMA (Uniform Transfers to Minors Act)² account, which allows a custodian to manage the funds until your child reaches the age of majority in your state.

Each choice has pros and cons, but the key is making sure your child’s financial needs are met without unnecessary legal delays or confusion.

A little planning now can make a big difference later, giving you confidence that the right people will be in place to manage your child’s future with care and clarity.

Primary vs contingent beneficiary: What’s the difference?

When setting up your life insurance policy, you’ll be asked to name not just one, but potentially two types of beneficiaries. Understanding the difference between them helps ensure your loved ones are protected, no matter what.

What is a primary beneficiary?

Your primary beneficiary is the first in line to receive your policy’s death benefit. For most new parents, this is typically a spouse or co-parent — someone who would immediately need financial support to maintain stability for your child.

What is a contingent beneficiary?

Hopefully, it doesn’t come to this — but what if something happens to your primary beneficiary? This is why you’ll also need to name a contingent beneficiary.

Think of a contingent beneficiary as your backup choice. If your primary beneficiary passes away before you, or at the same time, the contingent beneficiary receives the benefit.

This person might be a trusted sibling, parent, or even a legal guardian for your child, depending on your family setup.

Why naming both matters

Life changes, and so can your family structure. By naming both a primary and contingent beneficiary, you’re adding an extra layer of protection.

It’s also a good idea to review and update your choices if your circumstances change, like after a divorce, a new child, or a major life event. Keeping your designations current ensures your intentions are always clear.

How to choose a beneficiary with confidence

Choosing the right beneficiary can feel like a big responsibility, but it doesn’t have to be overwhelming.

Think of it as choosing someone who will carry out your wishes and make sure your child is financially supported when it matters most.

Here’s a simple way to think through the decision.

Step 1: Think about financial responsibility

Ask yourself: can this person manage money well?

Your life insurance benefit is meant to cover things like childcare, housing, and future education costs. You’ll want someone who understands the weight of that responsibility and will use the funds wisely.

Step 2: Consider their relationship to your child

The last thing you want is a beneficiary who doesn’t have your child’s interests in mind. This is why you should ask yourself if the person you’re selecting is emotionally close to your child.

Do they understand your parenting values and long-term hopes?

Were they present during your child’s pivotal moments?

The answers to these questions matter more than you might think, especially if they’ll be stepping into a caregiving role or managing money on your child’s behalf.

Step 3: Look at long-term stability

Let’s be clear that when we talk about stability, we don’t mean that the beneficiary needs to be someone who has everything figured out financially.

Rather, it just means the person is in a good place to be there for your child if needed.

Consider their health, age, and current life circumstances.

Are they someone who will still be around and capable years from now? If your answer is yes, the person or relative you’re considering may be a worthy candidate.

Step 4: Confirm legal authority or willingness

Finally, make sure the person you choose is both legally able and willing to take on the role.

Have a conversation with them — and potentially loop in an attorney. This is especially important if they’ll be named in a trust or asked to manage money for a minor.

If you’re feeling unsure of your choice or life circumstances change, you can always update your beneficiary later. The important thing is to make the best choice for today, knowing you’re protecting your child’s tomorrow.

Choose a beneficiary today so your child is protected tomorrow

When it comes to protecting your child financially, it’s all about thinking ahead. Naming the right beneficiary on your life insurance policy is a powerful way to protect your family’s future, and it doesn’t have to be complicated. At SBLI, we’re here to make life insurance simple, supportive, and tailored to you.

Do you need help deciding what’s best for your family? We’ve got tools, resources, and a friendly team to guide you every step of the way.

Get a quote on our life insurance policies or speak to a trusted SBLI agent today.

This information is provided as general information and is not intended to be specific legal or financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a legal, financial or tax professional to discuss your individual circumstances and objectives.
¹Source: Investopedia, “Beneficiary,” accessed April 22, 2025.
²Source: Investopedia, “Uniform Transfers to Minors Act (UTMA),” accessed April 22, 2025.

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