Life Insurance Beneficiaries: When Was the Last Time You Checked Yours?

September is Life Insurance Awareness Month, making it a great time to think about more than simply whether you have life insurance. There’s another important question to ask:

Who would receive the benefit from your policy if something happened to you?

Your life insurance beneficiaries are the people or organizations you designate to receive your policy's death benefit. Choosing them may have been something you did years ago when you first enrolled in coverage - but life can change quite a bit after that.

A marriage, divorce, new baby, grown children, or other major life change can all be good reasons to take another look at your beneficiary information.

What Are Life Insurance Beneficiaries?

A life insurance beneficiary is the person, people, trust, or organization you designate to receive the proceeds of your life insurance policy after your death.

Depending on your policy, you may be able to name more than one beneficiary and determine what percentage each will receive.

Beneficiary designations are an important part of your life insurance coverage. After all, having a policy is only part of the picture - you also want to make sure the benefit is directed where you intend it to go.

Primary vs. Contingent Beneficiaries

When reviewing your life insurance beneficiaries, you may see two different types: primary and contingent.

A primary beneficiary is generally the first person or entity designated to receive the life insurance benefit.

A contingent beneficiary, sometimes called a secondary beneficiary, is generally next in line if the primary beneficiary is unable to receive the benefit.

For example, someone might name their spouse as their primary beneficiary and another family member or trust as a contingent beneficiary.

Having both primary and contingent beneficiaries can help make sure your policy reflects your wishes even if circumstances change.

When Should You Review Your Life Insurance Beneficiaries?

You don't necessarily need to wait for Life Insurance Awareness Month to check your beneficiaries. In fact, reviewing them periodically - and especially after a significant life event - can be a helpful financial habit.

Consider reviewing your beneficiary designations after:

• Getting married

• Getting divorced or separated

• Having or adopting a child

• The death of a previously named beneficiary

• Children reaching adulthood

• A significant change in your family circumstances

• Changes to your estate planning

• Starting or changing a business

• Purchasing a new life insurance policy

• Changing jobs or benefits

Even if you haven't experienced a major life change, it may still be worth checking your policy occasionally to make sure the information is accurate and up to date.

Don't Assume Your Beneficiaries Automatically Change With Your Life

This is one of the most important reasons to review your life insurance policy.

Your personal circumstances may change, but that doesn't necessarily mean your beneficiary designation changes along with them.

Getting married, having a child, updating a will, or experiencing another major life event does not necessarily update the beneficiary information on an existing life insurance policy.

That's why it's important to review the actual beneficiary designation associated with each policy rather than assuming your current wishes are already reflected.

Make Sure Your Beneficiary Information Is Complete

Choosing the right person is important, but so is providing accurate information.

When reviewing your life insurance beneficiaries, check that the information requested by your insurer is complete and current. Depending on the carrier, this could include information such as a beneficiary's full legal name, relationship to you, date of birth, address, or other identifying details.

If you've named multiple beneficiaries, also review how you have allocated the benefit among them.

Requirements can vary by insurance carrier and policy, so contact your insurance provider or benefits administrator if you're unsure what information is needed.

Be Careful When Naming Minor Children

Parents often purchase life insurance because they want to provide financial protection for their children. However, naming a minor child directly as a beneficiary can create additional considerations because minors generally cannot directly receive and manage life insurance proceeds on their own.

There may be different options available depending on your circumstances, such as establishing an appropriate trust or making arrangements through a custodian.

Because beneficiary and estate-planning decisions can have legal and financial implications, consider speaking with a qualified financial or legal professional when minor children are involved.

What About Life Insurance Through Work?

If you have life insurance through your employer, association, or another group benefit program, don't forget about those beneficiary designations.

You may have completed a beneficiary form when you originally enrolled and haven't thought about it since.

Take a few minutes to review any life insurance coverage you currently have, including both individually purchased policies and group coverage. If you have multiple policies, each may have its own beneficiary designation that should be reviewed separately.

Life Insurance Awareness Month Is a Great Time for a Quick Check-In

Life insurance is designed to provide financial support to the people or causes you care about after you're gone. Making sure your life insurance beneficiaries reflect your current wishes is a small but important part of keeping that protection up to date.

This Life Insurance Awareness Month, consider adding a beneficiary review to your financial checklist.

Ask yourself:

Who is currently listed? Is the information accurate? And does my designation still reflect what I want today?

If you don't know the answer, now may be a good time to find out.

A few minutes spent reviewing your life insurance today can help ensure your coverage continues to support the people you intended it to protect.