Life Insurance Changes—Is it time to change your beneficiary?
By Jamie K. Fleischner, CLU, ChFC, LUTCF
President, Set for Life Insurance
If you have experienced a life change in the last few years, it may be a good idea to review your beneficiaries on your life insurance.
Changing a beneficiary requires a simple form. However, if it not changed before a claim occurs, it can have severe tax and other consequences.
Marriage. If you work at a firm with group benefits and got married in the last few years, you ought to review who you named as your life insurance beneficiary. Perhaps you named a sibling or your parents when you first signed up for benefits.
Divorce. Depending on your situation, you may no longer wish to have your ex-spouse as your primary beneficiary. Some divorce decrees still require you to carry some life insurance to care for either dependent children or ex-spouses.
Children. People tend to initially purchase their life insurance when they have children. However, naming minor children as beneficiaries can cause major problems as they may not be able to access the funds until they are 18. You would be better off naming a contingent beneficiary as a person of trust who would care for your children if you and your primary beneficiary are gone. Better yet, see an attorney and they can advise you whether you should have a trust or will set up to designate where the proceeds should go.
Buy sell agreement. If you owned life insurance in a business agreement and you no longer work at that business or have had a partner change, you may want to change your policy. Otherwise, your policy would pay a beneficiary who may no longer have an insurable interest.
For more information about life insurance beneficiaries, contact Set for Life Insurance today!