One of the key components of a life insurance policy is the beneficiary. A beneficiary is a person or people who will receive the death benefit payout in the event of your death, but what happens if you want to change your life insurance beneficiary? Can you do it, and how? In this article, we’ll look at who can change the beneficiary of a life insurance policy, how to change the beneficiary of your life insurance policy, and why updating your life insurance beneficiaries matters.
Who is Authorized to Change the Beneficiary of a Life Insurance Policy?
The person who has taken out the life insurance policy will be the one to decide who the beneficiary is. If you are the policyholder, you can only determine who the beneficiary will be. Most life insurance policies list one beneficiary, but some allow for more than one beneficiary.
You can change the beneficiary at any time, depending on the terms of the policy, without any penalty or fee. The policyholder should also be able to name a contingent beneficiary who will receive the death benefit payout if the primary beneficiary is deceased or unable to receive the funds.
Three instances when you may need approval to change the beneficiary name are:
- Give power of attorney to someone
- You live in a community property state
- Named an irrevocable beneficiary
Changing the Beneficiary of Your Life Insurance Policy
To change the beneficiary of your life insurance policy, you need to contact your insurance company. The process for changing a beneficiary may differ depending on the provider.
Generally, you will need to fill out a change of beneficiary form which includes information such as the policyholder’s name, the new beneficiary’s name, and the reason for the change. You may also need to provide a copy of the policyholder’s death certificate if the beneficiary is being changed due to their death. Once you complete the form, you must submit it to the insurance company for approval. The insurance company will review the form and let you know if the change has been approved.
Importance of Updating Your Life Insurance Beneficiaries
It’s essential to keep your life insurance beneficiaries up to date, as this ensures that the death benefit payout will go to the intended recipient. This is especially important if your life circumstances have changed, such as getting married, divorced, or having a child. For example, if you have named a previous spouse as the beneficiary but have since remarried, you may want to update the heir to your current spouse.
So, you must keep your life insurance policy up to date in case you ever need to make a claim. If you have named a beneficiary who is no longer living, the insurance company may not be able to process your claim.
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