What to Consider When Naming Beneficiaries
Review Your Life Insurance Beneficiaries Annually to Ensure Your Policy Aligns with Your Current Life Circumstances
Few decisions in life insurance matter more than who receives the benefit. The other details about how much, how long, and how it works are all possible factors in determining what is given to whom.
Choosing a beneficiary can be a deeply personal decision. It is also a powerful one.
Selecting your beneficiary can be a permanent decision if beneficiaries are designated as irrevocable. But many people don't realize that deciding who benefits is not a set-it-and-forget-it step. It is something to look at over time to help make sure your policy matches your life.
Why would a beneficiary need to be changed? Because life sometimes has a way of surprising us when we least expect it. One way to help avoid unintended beneficiary outcomes is to review your beneficiaries annually.
What might an annual review look like? And what topics could you cover? Let's dive in.
Gather information.
Collect current policy and financial documents. This could help you understand how your beneficiaries are currently designated and what your life insurance policy includes. This can also help remind you whether you designated your beneficiaries as revocable or irrevocable beneficiaries.
What has changed?
This is an important question to ask yourself. Life experiences such as divorce, the death of the beneficiary, or children reaching maturity are all important considerations. If there were a divorce, it's a good idea to talk to your divorce attorney to understand how your state laws or your divorce decree may affect your policy.
Are the right people listed?
If nothing has changed, you might decide to keep your beneficiary designations. If you simply want to change things based on personal preference, you might update your policy.
Do the percentages total 100 percent?
It isn't uncommon to have multiple beneficiaries. If this is the case, make sure the math works and that the total given matches the full amount. For example, Beneficiary A receiving 40 percent and Beneficiary B receiving 55 percent still leaves 5 percent with nowhere to go. A few missing percentages could be problematic.
Do you have contingent beneficiaries?
If your primary beneficiary passes before you and no backup is listed, the benefit may go back to your estate. Having contingent, or backup, beneficiaries can help ensure your wishes are documented.
A real-world example.
Suppose a client purchased a life insurance policy in his twenties and named his sister as the beneficiary. Years later, he was married with two children, but never thought to update his original life policy. This could cause issues if he were to pass unexpectedly, especially if he assumed the policy benefits would go to his wife.
We hope you find these questions helpful as you prepare for a more detailed conversation with us.
Ann Konasiewicz
101 Round Hill Dr
Rockaway, NJ 07866-1214
Office: 973-627-3630
Schedule a time to meet by phone,
Primerica representatives are not financial or estate planners, or tax advisors. For related advice, individuals should consult an appropriately licensed professional.
Primerica representatives market term life insurance underwritten by National Benefit Life Insurance Company, Home Office: Long Island City, NY in New York State; Primerica Life Insurance Company, Executive Offices: Duluth, GA in all other U.S. jurisdictions; and Primerica Life Insurance Company of Canada, Home Office: Suite 400, 6985 Financial Drive, Mississauga, ON, L5N 0G3, Phone: 905-812-2900 in Canada.
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