Last updated on January 6th, 2019
Don’t let your family be torn apart or an old ex have the last laugh. Update your life insurance beneficiary designations today.
Life insurance is one of those topics that no one really likes to think about. I sure as hell don’t.
It’s much easier to pretend that we’ll live forever, but unless you’re a Highlander that just isn’t true.
Since you’re a responsible person and you want to make sure your family is taken care of when you’re gone, you probably already have a life insurance policy (if you don’t you should start shopping around for one now).
But even if you already have more than enough life insurance, when was the last time you actually looked at your policy and verified it was still set up the way you want it to be?
Most people just sign up for a policy and make their regular payments without giving it a another thought. They simply take their term life insurance paperwork and file it away for good.
And most of the time that’s fine. But there are some times in life when you’ll want to take a closer look at your policy and update your life insurance beneficiary designations.
When to Change Your Beneficiary Designations
When you’re young and single you probably don’t have much need for life insurance, and you probably have either your parents or siblings listed as beneficiary.
But when you get married, you obviously want to make sure your spouse is listed as the primary beneficiary.
As your family grows and you start having children you’ll want to add them to your policy too.
Typically the spouse remains as primary beneficiary and the kids are named secondary, or contingent, beneficiaries. That just means if both you and your spouse die at the same time your kids would get the money instead.
The further you move up the career ladder the more your family will come to rely on your growing income, especially if you’re a single income family.
While your beneficiaries may not change you will probably need to increase your coverage to ensure they can continue to pay the mortgage and other bills.
If one or more of your beneficiaries die before you then you’ll want to remove their name and either add someone else or reallocate the percentages to the remaining beneficiaries.
Of course if you get divorced you will certainly want to remove your ex-spouse from your policy so they don’t receive anything.
If you forget to change your life insurance designations…
You’ll never know because you’ll be dead.
But it could tear your family to pieces or leave them out on the street.
Just imagine you get divorced and remarried but forget to change your beneficiary designation.
Your ex could collect on your policy while your new spouse and kids are left with nothing.
Or imagine you have only one child when you first buy life insurance. You later have more kids but forget to update your policy.
When you die all of insurance proceeds will go to your oldest child and the others will get nothing.
Maybe he’ll share like you would want him to, but he could also decide to keep it all to himself.
This kind of thing has happened before and families have been torn to pieces over insurance proceeds.
It would be a shame for you to pay life insurance premiums year after year only to see the wrong person cash in on your policy.
Be smart and double check your life insurance beneficiaries today.