Insurance Beneficiaries: When Did You Last Check?

Life insurance is often put in place during a major moment: buying a home, starting a family, building a business or protecting someone who depends on your income.

Then life keeps moving.

As relationships change, children grow up, families expand and businesses evolve, reviewing beneficiary designations becomes a small but important financial task that helps ensure your insurance proceeds support the people and priorities you intend.

What is a life insurance beneficiary?

A beneficiary is the person, organization, trust or estate named to receive the death benefit from a life insurance policy.

You may name one beneficiary or several and assign a percentage of the benefit to each. You may also be able to name a contingent beneficiary who would receive the proceeds if the primary beneficiary dies before you or at the same time.

The Financial Consumer Agency of Canada recommends reviewing beneficiary designations periodically and updating them when necessary.

Why the designation deserves its own review

Your will and your insurance policy are connected parts of your estate plan, but they are not interchangeable. The beneficiary information held by the insurer matters, so it is important to confirm the designation directly with the insurance company or your advisor.

A regular review helps answer a simple question: if the policy were needed today, would the benefit go where you currently intend? The answer may have changed since the policy was first issued.

When should you check your beneficiaries?

Consider reviewing your designations after a meaningful life or financial change, including:

• A marriage, separation or divorce

• The birth or adoption of a child

• The death of a named beneficiary

• A child reaching adulthood

• A change in caregiving or financial responsibilities

• Starting, buying or selling a business

• A new or updated will or estate plan

• A major change in your insurance coverage

• Approaching or entering retirement

It is also reasonable to include beneficiary designations in a broader annual financial review, even when nothing significant appears to have changed.

What should you confirm?

A useful beneficiary check goes beyond recognizing the name on the policy.

1. Is the intended person or organization named?

   Confirm that each beneficiary still reflects your wishes and that names are recorded correctly. If you have several policies - including personally owned and employer-provided coverage - review each one separately.

   
   

2. Are the percentages clear?

   If more than one beneficiary is named, verify how the benefit is divided and make sure the percentages reflect your intentions.

   
   

3. Is there a contingent beneficiary?

   A contingent beneficiary provides an alternative if a primary beneficiary cannot receive the benefit. Without an effective beneficiary designation, proceeds may be payable to the estate, depending on the policy and applicable law.

   
   

4. Is the designation revocable or irrevocable?

   A revocable beneficiary can generally be changed by the policy owner. Changing an irrevocable beneficiary normally requires that beneficiary's written consent. If you are unsure which type you selected, ask the insurer or your advisor to confirm it before making plans based on an assumption.

   
   

5. Is a minor named?

   Naming a minor requires additional thought. The Government of Canada notes that a trust, trustee or administrator may be appropriate because a minor generally cannot receive and manage the proceeds directly. Provincial rules can differ, so legal guidance is valuable.

   
   

6. Does the designation still fit the estate plan?

   Review the insurance policy alongside your will, powers of attorney, business agreements and other beneficiary designations. The goal is not for every document to say the same thing; it is for the pieces to work together intentionally.

   
   

Make sure the policy can be found

A well-planned policy is most useful when the right people know it exists.

The Financial Services Regulatory Authority of Ontario encourages policyholders to tell beneficiaries or loved ones about the policy, where the information is stored and how to contact the insurer or advisor.

You do not need to share every financial detail. But someone you trust should know where to find the policy information and whom to call.

A simple beneficiary-review checklist

Set aside a few minutes and check each life insurance policy for the following:

• The primary beneficiary or beneficiaries

• Any contingent beneficiaries

• The percentage assigned to each beneficiary

• Whether a designation is revocable or irrevocable

• Any special planning needed for a minor, trust or estate

• Whether the policy information is stored securely and can be located

• Whether the designation still works with your current estate plan

If anything is unclear, contact the insurer or your insurance advisor. Changes should be completed using the insurer's required process, and legal or tax advice may be appropriate when the situation is complex.

One small review can create greater clarity

Beneficiary planning is not about expecting the worst. It is about making your intentions easier to understand and carry out. Checking a designation takes relatively little time, but it can help ensure that an important part of your financial plan still reflects the people, responsibilities and legacy that matter to you today.

When did you last review the beneficiaries on your life insurance policies? Life & Legacy Advisory Group can help you connect your coverage, estate plan and financial priorities.

This article provides general information and is not intended as personalized financial, insurance, tax or legal advice. Beneficiary and estate-planning rules vary by policy and jurisdiction. Consult the appropriate professionals for advice about your circumstances.