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When naming a beneficiary to a life insurance policy, individuals must consider the
following factors:

1. Conflicts with will

A life insurance policy is a contract which pays money to a designated beneficiary listed in the policy. A will does not trump this designation. So, if you want to have the money go to another party, you will need to contact the insurer and designate a new beneficiary.

2. Forgetting to Update

Once a beneficiary is set, it can be changed as circumstances dictate (such as marriage, divorce, beneficiary death, etc.). It is important to promptly make changes to your policy and needed an not put it off. A divorce of an old wife does not take her off the policy just as a new marriage does not add the new spouse.

3. Correctly Naming Family Beneficiaries

When you want specific familial distributions to be made from a policy, you have to take great care to ensure proper designation of beneficiaries.

There are two ways in which money is distributed along family lines:

Per Capita – proceeds are divided by the person. For example, money is inherited equally among three children.

Per Stirpes – proceeds are divided by the branch of the family rather than by the person. If one of the children dies, then the proceeds which were payable to that person are then paid to that person’s surviving children.

4. Naming Only a Primary Beneficiary

People can die at any time and a beneficiary can predecease you. So, it is necessary to update a beneficiary should one die unexpectedly.

5. Disinherting a Spouse

Life insurance policies are not the keeper of the public morals. Therefore, there are few restrictions against naming a beneficiary other than your spouse. The only exception is in community property states for which a spouse would be required to sign a form waiving rights to money. So, check your state domestic property law in advance.

6. Naming Minors as Beneficiaries

In naming a minor beneficiary, you must keep abreast of several factors:

Dependent Beneficiary – Life insurance proceeds for a person with special needs can put that person at risk for losing government benefits or assistance. For this reason, a Special Needs Trust may need to be named as the beneficiary.

Minor Beneficiary – Many insurance companies won’t pay policy proceeds directly to minors. Therefore, other legal arrangements such as custodial accounts or trusts may be necessary.


The life insurer has only a limited duty to investigate the whereabouts of a beneficiary. You can only imagine how much effort a company wants to make to give money away. So, it is absolutely incumbent upon you to tell a beneficiary about the policy and give them a copy for safekeeping.

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