A lot can happen over the course of your term life insurance policy. Divorce. Marriage. A new child. A new job. A bigger apartment! The possibilities are endless! As life changes, so should your life insurance. The beneficiaries you chose when you first purchased your policy may no longer be appropriate, along with the term and amount. Below are a few scenarios that might cause you to review your term life beneficiaries. If you're a Direct Auto & Life Insurance policyholder, we'll help you understand how to go about updating your beneficiaries.
Your marital status is changing
Getting married? Congratulations! You may now have a spouse that's dependent on you, in which case you'll want to consider designating them as your life insurance beneficiary. If you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin) you'll have to get your spouse's consent to actually name someone other than them as your beneficiary.
On the flip side, let's say you're going through a divorce. You may automatically assume that means removing your spouse from your life insurance policy, but that's not always the case. As we noted in Term Life Insurance After Divorce, you could be required to designate your ex-spouse or children as your beneficiary if you're the spouse who's required to pay alimony or child support and you're also the one whose life is insured. It all depends on the divorce settlement.
You're updating your will
Let's say you update your will to say that everything goes to your daughter. Your life insurance policy still names your ex-spouse as the beneficiary of your policy, though. In the event that something happens to you, who gets the check? Your daughter or your ex-spouse?
Your ex-spouse. "The life insurance policy trumps the will," says insurance analyst Donald Light via Insure.com. Regardless of what the will says, your life insurance money will go to the beneficiary listed on the policy.
Double checking that your will lines up with your life insurance beneficiaries can help make sure that your final wishes are carried out.
You're about to have major surgery
Open-heart surgery. Shoulder replacement. Appendectomy. Surgical procedures carry risk, however big or small. For many people, these are moments that cause them to reflect on life. If your upcoming surgery has you wondering, Should I really name so-and-so as my life insurance beneficiary? then give your life insurance company a call.
You become financially responsible for a lifelong dependent
If you have a lifelong dependent, like a child or relative with special needs, naming them as a beneficiary could put them at risk for losing eligibility for government assistance, according to Insure.com. Why? Because anyone who receives a gift of more than $2,000 is disqualified for Supplemental Social Security income and Medicaid.
If you become financially responsible for a loved one that can't take care of themselves, talk to a financial advisor about how you can make sure they're cared for in the future. Naming or keeping them as your term life beneficiary may not be the best route and could jeopardize their eligibility for government assistance in the future.
You have children or grandchildren
The birth of a child is one of the most exciting changes in life. Don't let the chubby cheeks and bedtime lullabies distract you from making sure you take care of your financial situation. Whether it's your child or a grandchild, you can avoid confusion and specifically designate additional children or grandchildren as beneficiaries, especially if you want your life insurance to be divided in a particular way.
Review your life insurance beneficiaries
Is it the right time to review your beneficiaries? Keep in mind that for the most part, you can name your spouse, domestic partner, children, grandchildren, relatives, friends, charities, businesses, trusts, or your estate as your beneficiary. Call 1-877-GO-DIRECT to update your policy and talk with a friendly, experienced representative or stop by a Direct Auto & Life location near you. Your life may change, but you can count on our great service to stay the same—no matter what!
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*Policy terms and conditions apply. Individual term life insurance by Direct General Life Insurance Company, Nashville, TN. Policy 58TL02010713. Premium and other terms will vary by state, the insured's age, and the selected coverage.