TL,DR: Make sure your beneficiary form is always current; if you get divorced and your ex is still listed as the beneficiary, s/he will get the proceeds, despite what your will says or if the divorce was disastrous, etc.
Your life insurance contract is just that – a contract. It’s a legally binding document which is designed to be paid out exactly as it is written. The beneficiary of the life insurance policy is the person who will get the proceeds of the policy. You will name your beneficiary on your application, and confirm it when you receive your policy. To change your beneficiary, in most instances, you need only complete a short form which is usually available online. Sounds easy, right?
Except, sometimes devastatingly, it does not always work out that way. Many times, people either forget to update their beneficiary when a life change occurs, or simply assume their will will control. Both do nothing to alter the listed beneficiary. So, if you take out a life insurance policy when you are married to your first spouse, and then go through the most horrible divorce in the history of all time, but you forget to take his name off as the beneficiary of your life insurance policy, when you pass away, the insurance company will send him a check and not your beloved second spouse. Forget that since the divorce you’ve gotten re-married, and have two children, and God bless them! three grandchildren who are just delicious! You lived a full and excellent life! But that money isn’t going to them. Roll over in your grave because you neglected to update a form. Totally avoidable heartache!
- If you get divorced, update your beneficiary forms.
- If you get remarried, update your beneficiary forms.
- If you have or adopt a child, update your beneficiary forms.
- If you have an insurance policy with beneficiary forms, just look them over once a year and make sure they’re updated, because why risk it? A minute a year.
Every year, you should speak with your insurance expert about your policies and just have a quick conversation and check in. My clients appreciate that chat immensely. Most of the time there’s nothing major to update, but now and again we’ll be talking and a detail will pop up and suddenly a forgotten need will be uncovered. Once a year, review your policies and give that beneficiary form a once-over to be sure it’s up to date, and if it has to change, we can take care of it together, quickly and painlessly. Yes, really.
If you want to know more about this, reach out and it will be my pleasure to discuss.