Why It Is Crucial to Keep Your Own Beneficiary Designations Up to Date.

​As professionals working in the insurance industry, we have seen firsthand how outdated or unclear beneficiary designations can create unnecessary delays in claim processing, disputes, legal costs, and hardship for families during an already difficult time. 

​When is the last time you educated a policyholder, family member, friend or even took steps yourself to review your beneficiary designations? If the answer is, “not for quite some time” or “I haven’t” you are not alone. However, it may be time to do so!
 
Why Updating Beneficiaries Matters-Life Events
Events like marriage, divorce, the birth or adoption of a child, or the death of a loved one can significantly impact intentions for who should receive life insurance proceeds. Common scenarios include:

• Children born or adopted after the initial designation being unintentionally excluded.
• An ex-spouse remains as the primary beneficiary despite the policyholder’s current circumstances.
• Proceeds defaulting to the estate because a primary beneficiary predeceased the insured and no contingent beneficiary named.
• Trust named as beneficiary does not match the legal trust document.
• Trust has been amended, terminated, or lost.

 
Avoiding the Situations We Often Help Resolve
We have all processed claims that became complicated due to outdated designations. Legal disputes, claim payment delays, and family conflict are more common than they should be and often preventable with a few simple updates.
 
Best Practices for Keeping Designations Current
Clear documentation is very important. Best practices for beneficiary designations include:

• Review annually.
• Update after life events.
• Be specific. Include full names, birthdates, and relationships.
• Name contingent beneficiaries.
• Align with other estate planning documents, such as a will.
• List the trust name and date of trust exactly how it is listed on the legal trust document.
• Notify the insurance company of any amendment or termination of trust.
• Retain copies of all submitted beneficiary designation forms.

 
In Closing
We see the real-life impact of outdated beneficiary designations every day, let us use that insight to help educate others and protect our own families. Updating beneficiary designations is quick, easy, and one of the most important steps a person can take to ensure their intentions are honored and loved ones are protected. Take a moment today to educate or update, it could make all the difference tomorrow.
 
Key Takeaways:

• Inventory Your Policies
  • Create a list of all your insurance policies and their current beneficiary designations.
• Review the Timing
  • Note when you last updated each beneficiary designation.
• Reflect on Life Changes
  • Consider whether any significant life events (e.g., marriage, divorce, birth, death) have occurred since your last update.
• Ensure Alignment with Your Estate Plan
  • Confirm that your beneficiary designations are consistent with your overall estate planning goals.
• Contact Your Insurance Provider
  • Reach out to your insurance company to request or complete any necessary forms for updating beneficiaries.
• Communicate with Loved Ones
  • Discuss your intentions and any updates with trusted family members or beneficiaries.
• Store Documents Securely
  • Keep copies of your updated beneficiary forms and related documents in a safe and accessible location.

Blog Content Authored By: 
Erin Thompson (Thrivent)