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How to Change a Life Insurance Beneficiary

What actually controls who gets paid, and the five mistakes that cause the wrong person to receive the money

Why the will does not decide

Life insurance passes by contract, not through the estate. The insurer pays the person named on its own records. A will governs assets that go through probate, and a properly designated life insurance benefit does not. If your will leaves everything to your current spouse and the policy still names an ex-spouse, the insurer pays the ex-spouse.

Primary and contingent

The primary beneficiary receives the benefit. The contingent beneficiary receives it only if the primary has died first or cannot be located. Naming a contingent costs nothing and is the most commonly skipped step on the form. Without one, if the primary predeceases you, the benefit typically falls into your estate, which means probate, delay, and exposure to creditors that a named beneficiary would have avoided.

The five mistakes

• An ex-spouse still named. Divorce does not automatically remove a beneficiary in most states, and where a statute does revoke it, the rule is narrow and easily defeated by a court order or a plan document. Assume it did not happen automatically and check.
• No contingent beneficiary. See above.
• A minor child named directly. An insurer cannot pay a minor. The money goes to a court-supervised guardianship or is held until the child reaches majority, then paid in full to an eighteen-year-old. A trust or a custodial arrangement is almost always better, and it is a conversation worth having before naming a child.
• The estate named, by choice or by default. This pulls the benefit into probate, delays it, and can expose it to creditors.
• A designation that was never actually recorded. People remember completing a form. Insurers pay according to what is on file. These are not always the same thing, which is why the last step below matters.

How to make the change

• Request a change-of-beneficiary form from the insurance company. Most now offer it online, by mail, or through an agent. Do not write a letter and assume it will be honored; insurance companies act on their own forms.
• Complete it fully. Partial forms are the most common reason a change is rejected.
• Specify how multiple beneficiaries share. Percentages must total 100. Consider whether a deceased beneficiary's share should pass to their children or be redistributed among the survivors, because the default may not be what you want.
• Sign it, and get a spouse's consent if required. Some employer-sponsored plans and some community property states require it.
• Submit it and then confirm in writing that it was recorded. This is the step nearly everyone skips. Ask for written confirmation and keep it with the policy. Until the insurance company records the change, it has not happened.

What the form will ask for

• The policy number
• The beneficiary's full legal name, date of birth and relationship to you
• An address, and often a Social Security number, so the insurer can locate and pay them
• The percentage share, where there is more than one

A beneficiary's Social Security number on the insurance company's own form is routine. Being asked for your own Social Security number over the phone by someone who called you, or by a website, is not. We never ask for one.

Divorce, remarriage and blended families

These are the situations where designations most often go wrong, because the paperwork lags the life. A divorce decree may require you to keep an ex-spouse as beneficiary for a period, usually to secure support or a child's interests, in which case changing it can put you in breach of a court order. If a decree is involved, read it before you file the form.

When it takes effect

When the insurer records it, not when you sign it. Get the confirmation in writing.

Frequently asked questions