Beneficiaries - What's in a name?
Applying for group insurance can require a number of decisions to be made. One of these decisions is who to appoint as a beneficiary for your Life insurance. A beneficiary is the person you name in a life policy who will receive the death benefit upon your demise. Beneficiaries can be an individual, a number of people or an organization.
Naming a beneficiary ensures the money goes directly to that person (or people), providing quick access to funds that might be needed for funeral costs or other immediate financial needs. Sometimes those who are unsure who to list as their beneficiary will name their estate. Under these circumstances, the estate’s assets cannot generally be distributed until the will (if there is a will) has been probated, and the final tax returns have been prepared and filed. One thing of note, the cost of probate could diminish the amount available to the heirs.
Once you’ve decided who you wish to designate, you must determine if the beneficiary is to be listed as revocable or irrevocable: a revocable beneficiary is one you can change, anytime you wish, without the beneficiary’s consent, while an irrevocable beneficiary cannot be changed without written consent from the beneficiary. (By law, in Quebec, a spouse beneficiary is irrevocable unless you designate them as revocable.)
As you can see, several factors go into naming a beneficiary. Many people fill this information out when they apply for insurance, and then forget about it. As important as it is to take your time when making this decision, it is just as important to periodically review your decision, especially after important life events such as a marriage, birth or adoption of children, a divorce or any other major life change. You want to ensure it’s still reflecting your wishes and the proceeds are going to the correct person.