Recently, consumer advocate Bruce Williams was asked about life insurance proceeeds when no beneficiary is named. His answer was fine, but it made me realize that we haven't addressed this particular issue. The question to which Bruce replied involved group life insurance, but is equally valid regarding personally owned policies.
Naming someone in a will is not the same as naming that person on a policy. When there's no beneficiary listed on a life insurance policy, any proceeds will be paid to the deceased's estate, and could be subject to probate and even estate taxes. It also means that the funds may not be immediately available for final expenses. So, it's worth checking your group life plan to make sure that you've named someone to receive the proceeds.
But leaving that line blank isn't the only problem: if you've divorced and remarried (or even just stayed single), your ex- may still be listed as the beneficiary of your plan. Again, this could be a problem if, for example, your new spouse needs those funds for final expenses. The ex- is under no obligation to pony up his or her windfall.
Of course, these issues apply to any non-group plans you own. It's a good idea to review those periodically, and to make sure that the beneficiary designations meet your current needs and goals.
Better safe than sorry.
Naming someone in a will is not the same as naming that person on a policy. When there's no beneficiary listed on a life insurance policy, any proceeds will be paid to the deceased's estate, and could be subject to probate and even estate taxes. It also means that the funds may not be immediately available for final expenses. So, it's worth checking your group life plan to make sure that you've named someone to receive the proceeds.
But leaving that line blank isn't the only problem: if you've divorced and remarried (or even just stayed single), your ex- may still be listed as the beneficiary of your plan. Again, this could be a problem if, for example, your new spouse needs those funds for final expenses. The ex- is under no obligation to pony up his or her windfall.
Of course, these issues apply to any non-group plans you own. It's a good idea to review those periodically, and to make sure that the beneficiary designations meet your current needs and goals.
Better safe than sorry.
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