Does the Beneficiary of a Term Life Policy Have to Have a Social Security Number?

Term life insurance is a type of life insurance that provides basic death benefit protection in exchange for premium payments. As long as the policy is in force when you die, your beneficiary will receive the death benefit. When naming a beneficiary, the life insurance company will ask for some information about the beneficiary. Part of that information may include the beneficiary's Social Security number. While the beneficiary does not need to have a Social Security number, there may be some benefit to giving it to the insurer anyway.

Process

When you name a beneficiary, you simply write down the name of the person whom you trust to receive the proceeds of your life insurance policy. If the policy pays a claim while it is in force, the beneficiary will receive the money. The insurance company will need to know the name of the individual who will be the beneficiary. The company also requests their address and telephone number (or some other way to contact the beneficiary). The insurance company may also request the beneficiary's Social Security number.

Purpose

The insurance company requests the Social Security number of the beneficiary because Social Security numbers are unique to each individual. This gives the insurer some assurance that the individual making the claim is the actual beneficiary and that no insurance fraud will take place during the claims process.

Benefit

The benefit of giving the insurance company the beneficiary's Social Security number is that it may make it easier to identify or locate the beneficiary. If the beneficiary moves, for example, the insurer may not be able to reach the beneficiary at the address and telephone number you provide to the insurer. If the beneficiary tries to make a claim and the address and telephone number do not match the information on file, then the insurer may want additional information to verify the identity of the beneficiary.

Disadvantage

The primary disadvantage to giving the insurance company the beneficiary's Social Security number is the perception that the beneficiary's privacy is eroded. Social Security numbers may be stolen and used for criminal purposes if the company does not properly dispose for the number once it is on file. Additionally, if the insurer's information database is ever compromised, the beneficiary's Social Security number could be stolen.

Considerations

While there are risks in giving out the beneficiary's Social Security number, giving the number to the insurer is generally a low-risk proposition. Make sure you ask the beneficiary beforehand, however, before including it on the application form. Explain to the beneficiary that this may make it easier or more convenient to make a claim after your death.