When things in your life change, it may be time to reevaluate your life insurance beneficiary. When you purchase a life insurance policy, you have to designate this to an individual you trust so that the insurance company knows whom to allocate the proceeds of the policy. It’s important to keep this current, so your benefits go to the person you believe needs it instead of defaulting to your estate. So, when should you review beneficiary designations? Let’s look at some life-changing situations to consider:
If you set up your policy while you were single and then got married, be sure to add them as your beneficiary if you wish for your spouse to receive any benefits.
Birth or Adoption of a Child
For many who have children or plan to have children, the goal is to make sure they have everything they need. With an attorney, you can establish a trust or use the Uniform Transfers to Minors Act as a way to leave money for your children. Additionally, if you want to leave an inheritance behind for your grandchildren, don’t forget to update the beneficiaries through the years. You also have the option to name more than one primary beneficiary.
Starting a New Job
When you start a new job, you’re elected benefits are evaluated. Most companies will offer a life insurance policy which you are required to designate a beneficiary.
Trust or Will
If you established a trust when you purchased life insurance, remove that trust as a beneficiary if the trust no longer exists. If the trustee passes away and there is no successor trustee, a life insurance company like Cole Harrison would need a claim form completed by the trustee.
When your will changes, you may consider changing your life insurance policy as well. Life insurance companies must follow the terms of the policy at death, regardless of what the will states.
Depending on the size of inheritance you receive, your life insurance needs may change if there is a large inheritance from a spouse or family member. You can meet with an attorney or Cole Harrison agent to determine if your beneficiary needs to be updated.
Business is Sold or Closed
If a policy is taken out with a business named as the beneficiary and the company closes, changes names or is bought out, consider the policy changes that are needed.
Depending on which state you live in, they could automatically revoke the beneficiary designation of a spouse upon divorce. If your divorce decree or property settlement state that the life insurance policy is to remain for the benefit of the former spouse, then that designation claims superiority. It may be beneficial to talk with an attorney about your policy at the time of a divorce.
Review your beneficiary designations after the loss of a parent, spouse or loved one. You might need to designate a new beneficiary if you named the deceased as a primary or contingent beneficiary.
Need help getting started or have questions about your life insurance policy? Contact a Cole Harrison agent today.