February 14, 2023
Your Guide to Life Insurance Beneficiaries
While purchasing a life insurance policy is the important first step in financially protecting and supporting your loved ones, the next important step is to select a beneficiary. A beneficiary is simply who receives the payout on the life insurance policy in the event of the policy owner’s death. In other words, your life insurance beneficiaries are the loved ones you want to financially protect and provide for even if you are not physically there.
It is essential to name a beneficiary for your policy (and keep it up to date) so that the right person or organization can benefit from it. A beneficiary can be:
- A person (such as a spouse, child, parent, friend, etc.)
- Several people
- An estate
- A trust
- A charity
Who would be most impacted in the event of your passing? This is a great place to start when thinking of whom to designate as your beneficiary. If the answer to that question is your children, though, it’s not usually recommended to name a minor child as a beneficiary on your policy. This is because the law forbids insurance payouts to anyone who has not reached the age of majority (18-21, depending on where you live). In this instance, it’s best to name an adult custodian you trust to use the money for things such as living expenses and education or work with an attorney to set up a trust.
Another vital thing to consider when deciding whom to name as a beneficiary is any debt and who will absorb your debt in the event of your passing. This could be a spouse or a cosigner on a loan.
Finally, if there’s a cause close to your heart you’d like to continue supporting even after you’re gone, you can name a charity as a beneficiary on your policy. Just make sure to include all the necessary details (more information on that below).
Once you know whom you want to benefit from your policy, here are a few more things to remember as you fill out your beneficiary form.
You can name more than one beneficiary.
For example, if you have multiple dependents, they can all be named life insurance beneficiaries. Just make sure to designate what percentage of the payout goes to each person. For example, you could designate 70% to a spouse and 30% to an adult child.
Don’t forget to name a contingent beneficiary!
A contingent beneficiary receives the policy payout if all primary beneficiaries predecease the insured or are otherwise disqualified. It’s important to name a contingent beneficiary so someone can benefit from your policy even if the primary beneficiaries are no longer eligible.
Be specific when naming your beneficiaries.
When designating your life insurance beneficiaries, clearly indicate their full legal name, date of birth, social security number, and relationship to the insured. When naming an organization, indicate the full legal name, mailing address, and TIN. When naming a trust, indicate the name of the trust, the date it was created, and the TIN (taxpayer identification number).
If naming multiple beneficiaries, include these details for each individual rather than something vague like “my children.” This is important to prevent any confusion or delays during the payout process.
Inform your beneficiaries (and keep them informed)!
Don’t forget to tell your beneficiaries they’re listed on your policy, keep them in the loop on your plans, and provide them with copies of your policy.
Review your policies and beneficiaries every year.
Pick a regular time every year, such as during tax season when you’re reviewing other financial documents. Remember that your beneficiaries won’t change automatically with major life events, such as marriage, divorce, or a child turning 18, so you’ll want to revisit your policy after these events and confirm all information is updated.
With a quick and simple review every year, you can ensure your loved ones are financially protected and comforted during an otherwise difficult time. Whether you’re purchasing a new policy or reviewing an existing one, BetterLife is here to help make the process as smooth as possible. You can review your beneficiary information through our online member portal or by meeting with an agent. Visit /policy-owner-services/ to access the member portal and your policy information.
Q: Where can I find my beneficiary information?
A: You can find this form on your member portal account’s Life Policy Details page. Find the beneficiary information between the plan and statement info.
Q: How do I update my beneficiaries?
A: Please download and complete the Request for Change of Beneficiary Form to update one or more of your beneficiaries. Access the form by visiting /member-resources/policy-faqs/. Return the completed form to us, with any required associated documents, via fax (608) 833-4849 or mail to BetterLife, PO Box 1527, Madison, WI, 53701. For security reasons, we ask that you do not email us your completed form unless we have sent you a secure email. If you have any questions, please contact us at (608) 833-1936.
BetterLife is a different kind of life insurance company. Schedule an appointment with one of our expert agents to learn more about what makes us different and why you should become a member today!