From time to time, we hear about situations when people unexpectantly pass and their life insurance benefits went to their mother and siblings, instead of their spouse and children. The policy holder hadn’t updated their beneficiaries and their families were left with nothing. Beneficiaries are the people that you select to receive your money upon passing, and there are lots of stories of how funds have gone to the wrong people. So, while it might be difficult to think about your own passing, you would want to know that your family can afford to make arrangements and cover expenses, which is why you should keep your beneficiaries current.
You will typically complete a beneficiary form when opening a bank account, life insurance policy, or retirement account. The form indicates who you want to receive the funds, which can be one person (a primary) or multiple people. You may also have the option of selecting a secondary or contingent beneficiary, which is the person, or persons, who will receive your benefits if the primary is no longer available.
A good habit is to check your beneficiaries every two to four years and make sure that your policies have the right people listed. Open enrollment season is a perfect time to check. You should also check after major life changes: you get married or divorced; you have a child; the person you listed as beneficiary passes away. Usually, you just need to fill out a simple form and send it back to the insurance company to change your beneficiary.