Whether you have a permanent life insurance policy like whole life insurance or a term life insurance policy, the parties set to receive the death benefit after your passing are known as beneficiaries. Designating a beneficiary often means choosing a spouse, dependent, family member, or friend who will receive an insurance payout. But the beneficiaries are not set in stone; you can change or update them as your life evolves and your priorities change. Here are a few times when reevaluating your beneficiaries might be a good idea.
A marriage or divorce
Many people who take out a life insurance plan are thinking about the future of their families, so they naturally choose to make their spouse a primary beneficiary. This can mean adding a beneficiary to the plan after marriage or changing the plan after a divorce. A change in marital status is often a good time to reexamine the plan and ensure it matches your current situation.
Gaining a dependent
Priorities can change quickly once a child or other dependent enters the mix. Gaining a dependent is often a good time to think about your coverage and reevaluate your beneficiaries. Many people choose their significant others or whoever the child’s guardian would be if they passed away as the primary beneficiaries. This can help provide for the dependent’s long-term needs even after you’re gone.
Children growing up
When children age, their needs change, and they may have families, careers, and responsibilities of their own. All these milestones can be a time to update your life insurance policy to take those new realities into account. Some people choose to designate new beneficiaries or add their adult children as beneficiaries to ensure they are taken care of in the long term.
Someone passes away
A death among your family or friends can be devastating, making it challenging to concern yourself with more practical things. Once the shock subsides, you may want to reevaluate or change your life insurance beneficiaries. If one of your beneficiaries passes away, it’s a good idea to update the policy right away—whether that’s designating new beneficiaries and contingent beneficiaries, or just allocating a larger portion of the death benefit to someone else. If the plan isn’t updated, your benefits could go to your contingent beneficiaries; or if no one is available to accept the assets, they could end up in probate court.
Other major life events
This list isn’t exhaustive—many other major life events are good opportunities to reconsider and change your life insurance beneficiaries. Life events can bring changes in priorities, changes in responsibilities, and changes in income, all of which may affect your long-term goal for life insurance, and long-term plans for taking care of the people you love.
Source: iQuanti
