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Do You Need To Update Your Life Insurance Beneficiaries?

by Mike

Are you sure your life insurance beneficiaries are set up the way you want?

Life insurance is a subject no one likes to think about, but unfortunately we just don’t have a choice.  If you want to make sure your loved ones are taken care of you need to plan ahead.

For the most part, once you purchase a life insurance policy and name your beneficiaries all you have to do is continue paying your premiums and you can rest assured they will be well provided for after your death.  But there are a few times in life when you you’ll need to take another look at your policy and maybe even change your life insurance beneficiaries.  Let’s talk about some of the common life events that would cause you to update your policy.

When you’re young and single you probably don’t need much life insurance and what you do have is most likely earmarked for your parents or siblings.  But once you get married you’ll want to make sure your new spouse is listed as your primary beneficiary.

As you start earning more and taking on more responsibility (like a mortgage), you will probably want to increase the amount of your policy.  While a $25,000 policy may have seemed like a lot of money when you were 18 and care-free, it could be woefully inadequate once you are married with a mortgage and car payments to make every month.

Once you start having kids, you’ll need to update your policy again to add them as your life insurance beneficiaries.  If you want you can leave your spouse as primary and make the children secondary, but they should definitely be on there somewhere.

Obviously you’ll need to update your life insurance beneficiaries each time your family expands.  The last thing you want is to have one of your children wondering how you could have forgotten about them.

If one of more of your beneficiaries predeceases you then you will want to take them off your policy and either add someone else or reallocate the percentages to the remaining beneficiaries.

The same goes for divorce. There have been times where policy holders forgot to change their beneficiaries after a divorce and the new spouse and children were left empty-handed while the ex-spouse collected it all.

It would be a shame for you to pay 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.

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{ 3 comments… read them below or add one }

JT McGee

Who you pick as a beneficiary is very important, especially if you haven’t made any change-ups recently. I can’t even count how many times I’ve seen news stories about how a beneficiary died, and the estate was locked for years as family members fought over the benefits.

Keep it simple, up-to-date, and ON PAPER!
JT McGee´s last [type] ..Why You Earn 90 Less than What You Think

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krantcents

Don’t leave out retirement beneficiaries! This is something that should be checked annually. Good reminder!
krantcents´s last [type] ..Budgeting Is a Waste of Time

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Michelle Diamond

I guess it’s sad but true – money makes people do crazy things so keeping your policy beneficiaries up to date is definitely the right thing to do. I have seen my best friend’s family torn apart fighting over the funds of a life insurance policy and in the end, it just isn’t worth it.

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