When Do You Need To Review Your Beneficiary?
Life insurance beneficiaries should be reviewed regularly, especially during significant life transitions such as marriage, divorce, births, or deaths to ensure that your life insurance money benefits the intended beneficiary. Life insurance companies follow strict rules and state laws, so it’s best to know them beforehand to protect your loved ones from any potential claims or disputes.
Marriage, Divorce, Or Birth Of A Child
Life insurance is a crucial investment that provides financial protection to your loved ones in case of your sudden absence. To ensure your loved ones receive the insurance benefits, you need to review your beneficiary regularly. A life-changing event such as marriage, divorce or the birth of a child should prompt you to consider updating your beneficiary. If you get married and forget to update your beneficiary, your benefits might go to your ex-spouse, not your current partner. Similarly, when you divorce or have a child, you need to review your beneficiary and ensure it’s up to date. Any oversight might result in unintended consequences.
Death Or Change In Circumstances Of Your Beneficiary
The death of your beneficiary, and the subsequent failure to update your policy, could lead to a complicated legal situation. Alternatively, if your beneficiary experiences significant life changes such as illness, bankruptcy, mental incapacity or develops a substance abuse problem, you may need to change the beneficiary to ensure benefits are received by those who require it the most.
Updating Your Estate Plan
A considerable estate is often subject to state and federal estate taxes. Updating your beneficiary may reduce the taxes payable and ensure a more equitable distribution of your assets. A change in your estate plan may require a beneficiary update, such as including a trust to protect benefits. In conclusion, regularly reviewing your beneficiary is necessary to ensure the proper distribution of your assets when you are no longer around. Follow these simple rules for life insurance beneficiaries, so your loved ones aren’t left with financial hardship when you pass away.