Review Life Insurance Beneficiaries to Avoid Surprises

September is Life Insurance Awareness Month – a good reminder to review your beneficiaries.

Have you already purchased life insurance? That’s great! But did you know that you should review your beneficiaries on an annual basis, as life tends to bring changes that may call for updates.

Reasons to review your beneficiaries include1:

  1. You got married or engaged
  2. If you have life insurance prior to becoming married or engaged, your beneficiary is likely a parent, sibling or close friend. However, your new fiancé or spouse is probably the person who depends on you the most. Complete your commitment by making them your beneficiary.

  3. You divorced or lost a spouse
  4. Believe it or not, it’s common to forget to remove your ex-spouse as a beneficiary. Say you remarry and pass soon thereafter. If your ex-spouse is still listed as your beneficiary, he or she may have the legal right to receive the proceeds, leaving your new spouse empty-handed.

  5. Your child grows up
  6. As a parent, you hope that your child won’t always be dependent on you and your income. If they’ve grown up, have a job and a family of their own, they likely no longer need your coverage.

  7. You created a will
  8. If you die without a will in place, the state can decide how your estate is distributed and even who should raise your minor children. Because a life insurance policy trumps what is dictated in your will, it’s a good idea to make sure the two match so there is no confusion.

  9. You created a trust
  10. In some cases it makes sense to name a trust as your life insurance beneficiary. For example, if your beneficiary is a minor, has special needs, or doesn’t have the capacity to make important financial decisions, a trust can specify exactly when and how much they receive.

  11. You moved to a new state
  12. It’s a good idea to review your new state’s property laws in case your life insurance is affected. For example, if you live in a community-property state – a state that considers all assets owned by a married couple to be joint property – you may need to have your spouse’s consent in writing before designating anyone else as a beneficiary.

  13. You took out a loan
  14. If you co-signed a loan with someone, you may consider adding them as a beneficiary in the case you die and leave them with sole responsibility for the payments.

  15. You became involved with a charity
  16. If you care greatly for a certain charity, you can name it as a beneficiary as well.

Life insurance is a complicated matter that may require the help of your financial, insurance and legal advisors. Contact your financial advisor with Waddell & Reed to discuss your life insurance policy and beneficiaries, or even to take the first steps towards protecting those who matter most to you.


This information is provided for informational and educational purposes only  and may include references to concepts that have legal, accounting and tax implications. It is not to be construed as legal, accounting or tax advice, and is provided as general information to assist in understanding the issues discussed. Waddell & Reed does not provide tax advice.Waddell & Reed believes the information has been obtained from sources considered to be reliable, but does not guarantee the accuracy of the information provided. 

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