When should you update your life insurance beneficiary?

You should update your life insurance beneficiary whenever a major life event changes who you want to receive your death benefit. Life insurance payouts go to the person named on the policy—not the person named in your will. An outdated beneficiary designation can send hundreds of thousands of dollars to an ex-spouse, a deceased relative's estate, or someone you no longer intend to benefit.

Life events that should trigger a review

• Marriage: You likely want your new spouse to be your primary beneficiary.
• Divorce: In most states, a divorce does not automatically remove an ex-spouse from your life insurance beneficiary designation. You must make the change yourself.
• Birth or adoption of a child: Add your child as a beneficiary or update percentages among existing beneficiaries.
• Death of a beneficiary: If your primary beneficiary dies before you and you have no contingent beneficiary, the benefit may go to your estate and through probate.
• Remarriage: Blended families often require careful beneficiary planning to ensure all intended parties are included.
• Change in financial situation: If a beneficiary becomes financially independent or a new dependent enters your life, your designations should reflect that.
• Establishing a trust: If you set up a trust for estate planning, you may want the trust—not an individual—to be your beneficiary.

How to make the change

Contact your insurance company or agent and request a beneficiary change form. Fill it out with the new beneficiary's full legal name, date of birth, Social Security number, and relationship to you. Submit the form and confirm with the insurer that the change has been recorded. Keep a copy for your records.

Common mistakes

The most common mistake is simply forgetting. People set up a policy, name a beneficiary, and never revisit it—even after a divorce or new child. Another mistake is naming minor children directly. Without a trust or custodial arrangement, the insurer cannot pay a minor, and a court may need to appoint a guardian of the estate, which creates delays and costs.

What Truscott recommends

Review your beneficiary designations at least once a year and after every major life event. A Truscott policy checkup includes a beneficiary review as a standard part of the process. Contact us to make sure your life insurance benefit goes exactly where you want it to go.