The purpose of life insurance is to take care of your desired beneficiaries when you pass on. Many people spend much time deciding on the type of insurance and pay the premium for years, yet do not periodically check their beneficiary designations. Whether due to death or divorce, the person or persons you designated as the beneficiary might not be around any longer, or you might need to change the beneficiary for various reasons. The owner has complete control over the naming of beneficiaries, and can change the beneficiary up until the time of the death of the insured. The beneficiary can be one or more individuals or an entity such as a church or charity. Minors should generally not be named as beneficiaries, as the courts would have to name a guardian to administer the funds on behalf of the minor. Contingent beneficiaries are secondary beneficiaries that can be named. They get no benefit unless the primary beneficiary has already passed away. In general, you do not want to name your “estate” as beneficiary. Life insurance is designed to bypass probate, but if you name your estate as beneficiary, proceeds paid will be subject to the expense and time delays of the probate process. The bottom line is that every few years or after “life changing events”, you need to check your beneficiaries to make certain they are the ones you want to inherit your wealth.
Don’t make the mistake of thinking you can change your beneficiary in your will. The beneficiary of your life insurance policy can only be changed with a change of beneficiary from for your life insurance policy.