Updating Your Beneficiary Information: Why It Matters
Beneficiary information is probably not something you think about often, and with good reason. When selecting your beneficiary (or beneficiaries) during enrollment or a new job, you think this is a “set and forget” decision. However, forgetting to periodically update this information, especially after big life changes, could have substantial repercussions you may not be aware of.
The Dangers of Outdated Information
Here are some examples of beneficiary changes you may not have considered:
- Young people starting out in their careers may list their parents as their first beneficiaries. However, life moves on and should you make it down the aisle, you’ll likely want to update your beneficiary to your spouse or eventually your children. Otherwise, your benefit payments will go to your parents. If they are no longer living at the time, that leads to more complications (read on).
- Unfortunately, not all marriages last. After a divorce, updating your beneficiary is probably not the first item on your to-do list. However, your beneficiaries don’t automatically update if you remarry or remain single. Without updated information, it may not be your family or new spouse who receives benefits after you pass; it may be your ex.
- If your listed beneficiary is no longer living at your time of death, such as your parents or a spouse, and you have no contingent beneficiary, your life insurance money could go to your estate, the estate of the deceased beneficiary, or toward existing debt. This means that living loved ones would not get any money from your policy.
Or maybe you think that if all else fails, your last will and testament can settle any issues that come up. Not so: beneficiary forms outweigh wills in court. The details of a will do not matter if the beneficiary form is different. The beneficiary form is a binding legal document and takes precedent over the will.
Just a Few Minutes for Your Family’s Peace of Mind
Grieving and loss can be an uncomfortable subject. One of the few things within your control that can help your family in the aftermath is as simple as reviewing and updating a couple of forms. To ensure your life insurance benefits go where you want them to, you should take the opportunity to review and update your beneficiary information every year, or at least after major life changes.
If you have an American Fidelity life insurance policy and you need to make a change, you can fill out the Beneficiary Change form. The form requires a witness signature to complete.
This blog is up to date as of February 2021 and has not been updated for changes in the law, administration or current events.
