Beneficiaries – Who, What, and How to Protect the Proceeds of an Insurance Policy

By Roz Jones

The purpose of an insurance policy is to protect against loss. In the case of life insurance or other health-related policies, there is a beneficiary other than yourself who will receive proceeds from your policy. 

For most policies, you will determine who the beneficiary(s) are and what percentage they receive if there is more than one. Some policies, such as those protecting business interests, may require partners or other stakeholders to be named as beneficiary. 

Did you know? Millions of dollars go unclaimed annually due to the fact beneficiaries are unaware they are named recipients of policies? 

When you choose to protect your assets and your family, naming a beneficiary entitles them to tax-free dollars to offset costs and provide income during their time of grief, loss, and transition. That’s a noble and important thing, but there are important steps that need to be put into place to insure they receive their proceeds. 

Step #1. Name a beneficiary and a successor beneficiary. Times change and naming a beneficiary should change with the times. If you name a beneficiary and you outlive them, you must make sure to change the beneficiary or have a named successor in place. Sometimes an adult will be named in lieu of a minor to protect and manage proceeds until a minor comes of age. Your insurance agent can help you decide who to name and your estate-planning attorney can make sure all the documentation is in place. 


Step #2. Keep policies with your will and trust. It won’t help anyone if they don’t know where to find your policy information. Keep your policy and the contact information for the company, your agent, and your attorney together so your family members can take action in the event of your death. 

Step #3. Tell your beneficiaries they are named. Perhaps you don’t want to alert people to the fact there are specific people named as beneficiary of your policy. It can be highly personal and might cause some waves; however, your beneficiary should be made aware that they are named so they know to take action and proceeds are claimed. At the very minimum, be certain your attorney or the executor of your estate is aware of who the beneficiaries are and where to find them. 


Step #4. Keep up to date records. Things change. Names and contact info may change over time. Be sure to keep your records up to date. Consider reviewing your policies and beneficiary contacts annually and note any changes so there is no interruption should you pass away. 

Being named a beneficiary is an honor and a wonderful gesture on your part. Preserving your plan to benefit others and provide after your death is easier when you follow these simple steps.  

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