Do you have life insurance? Have you recently reviewed your beneficiaries to ensure they are up to date with your wishes in the event of your death?
It is very common for people to get life insurance as a benefit with their employer and/or take out a policy on their own. When this occurs, beneficiaries are named, and then life goes on. Years can go by with many life changes, but those beneficiaries are never changed or updated.
Here are some examples as to why you want to check on your beneficiaries at least once a year or immediately following any major life change (marriage, divorce, births, or deaths):
1. When you first purchased the life insurance policy, you were engaged to be married. Things did not go as planned, and you two decided to split. You have now remarried and have children with someone completely different. If something were to happen to you now, all of your life insurance proceeds would still go to your previous fiancée.
2. Similar to the first example, divorce can work the same way. Your previous spouse would get your money.
3. If you named your son and daughter as the beneficiaries when the policy was taken out and a third baby comes later, your third baby would end up with none of the proceeds.
4. You name a sibling as your beneficiary because when you first got the policy you were single. You are now married and have been for several years. When something happens to you, your spouse would not be entitled to your money to help him or her during your loss.
5. If you name a person as your primary beneficiary and that person predeceases you, is your contingent beneficiary (the next beneficiary you named) up to date? If the contingent beneficiary predeceases you as well, your proceeds would then go to your estate. Leaving your proceeds to your estate may allow creditors access to the proceeds, and your estate may be subject to taxes. This would not apply if a living beneficiary were to get the proceeds.
Life continually changes, and you need to make sure that your life insurance beneficiaries remain accurate and up to date. Beneficiary designations on life insurance policies take precedence over any wills or trust arrangements that are in place. Life is uncertain; make sure that your beneficiaries are not.
Specialty Claim Analyst