Can I Change My Life Insurance Beneficiary?

Yes, you can generally change your life insurance beneficiary. Life insurance beneficiary designations are important for ensuring policy proceeds are distributed to your intended recipients. Life events often necessitate updating these designations to align with your current wishes and circumstances. Regularly reviewing your policy ensures your financial wishes are honored.

Types of Beneficiary Designations

A revocable beneficiary designation allows the policy owner to change the named beneficiary at any time without their consent. This flexibility is common and provides the policyholder with control over their designation.

An irrevocable beneficiary generally cannot be changed without the written consent of the named beneficiary. This designation is typically used in specific situations, such as divorce decrees or certain estate planning strategies, where a guaranteed payout to a particular individual is legally mandated. Careful consideration should be given before naming an irrevocable beneficiary.

Beneficiaries are also categorized by their order of precedence. A primary beneficiary is the first individual or entity in line to receive the policy proceeds upon the policyholder’s death. You can name one or multiple primary beneficiaries and specify the percentage of the death benefit each should receive.

A contingent, or secondary, beneficiary receives the policy proceeds if the primary beneficiary is unable or unwilling to do so. This occurs if the primary beneficiary predeceases the policyholder or cannot be found. Naming a contingent beneficiary provides a crucial backup plan, preventing delays or legal complications in fund distribution.

Information and Documentation Needed for a Change

Before submitting a beneficiary change request, gather all necessary information and documentation. You will need specific policy details, including the policy number, your full legal name as the policy owner, and your date of birth. This information identifies your policy accurately for the insurance provider.

For each new beneficiary, provide their full legal name, relationship to you, date of birth, Social Security Number or Taxpayer Identification Number, current address, and contact information. Providing accurate and complete information for all parties helps prevent processing delays.

Obtain the official beneficiary change form from your life insurance provider. Most insurers offer these forms through their online portals, or you can request them by contacting customer service or your insurance agent. Some companies allow for online completion and submission, while others may require a physical form.

Carefully complete all informational fields on the form. If designating multiple beneficiaries, clearly indicate the percentage of policy proceeds each is to receive. The form will also specify if and when signatures are required, and whether notarization is necessary for the change to be legally valid.

Steps to Submit a Beneficiary Change Request

After gathering all necessary information and completing the beneficiary change form, submit the request to your insurance company. Several methods are available for submission, including mailing the physical form, submitting it electronically through an online portal, or sending it via fax.

If mailing the form, verify the correct mailing address with your insurer. It is often recommended to use certified mail with a return receipt to ensure proof of delivery and tracking. This creates a record of your submission.

For online submissions, navigate to the insurer’s secure online portal. This process involves uploading a scanned copy of the completed form or using an e-signature feature. After successful submission, confirmation screens appear, indicating your request has been received.

Following submission, expect to receive a confirmation of receipt from the insurance company within a few business days. Processing time for beneficiary changes ranges from a few days to a couple of weeks, depending on the insurer. The company will confirm when the change has been successfully processed and updated on your policy. Maintain copies of the submitted form and any confirmation notices is advisable for your records.

Important Considerations for Your Choice

When naming a life insurance beneficiary, specific scenarios warrant careful thought. Naming a minor directly presents challenges because minors cannot legally receive funds. Solutions include establishing a trust, naming a guardian, or utilizing accounts under the Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA).

Establishing a trust and naming it as the beneficiary offers significant benefits such as control over how and when proceeds are distributed, protection from creditors, and integrated estate planning advantages. Work with an attorney to properly draft the trust and correctly name it as the beneficiary is crucial for this strategy.

Life events, such as marriage, divorce, the birth of a child, or the death of a current beneficiary, necessitate reviewing and updating your beneficiary designations. Align your designations with current wishes and any legal obligations, like those arising from a divorce decree, is essential.

Understanding the difference between “per stirpes” and “per capita” distribution methods is important when designating multiple beneficiaries. “Per stirpes” ensures that if a named beneficiary predeceases the policyholder, their share passes to their descendants. Conversely, “per capita” distributes proceeds equally among the surviving beneficiaries at the same generational level, meaning a deceased beneficiary’s share would not pass to their heirs.