Life insurance is designed to help protect your loved ones after you’re gone. But owning a policy is just part of the process. Naming a beneficiary and keeping that designation up to date helps ensure your policy benefits are paid according to your wishes.
Take This 5-Second Quiz:
Question: Who receives your life insurance proceeds today?
A. My spouse
B. My children
C. Whoever is named in my will
D. I'm not sure
Answer: If you're not 100% sure, now is the time to review your beneficiary designations.
Choosing your beneficiaries
For 28% of U.S. households, the unexpected death of a primary wage earner would cause an adverse financial impact in just one month.1 But with life insurance in place and the intended beneficiary assigned, you can help reduce your loved ones’ financial stress.
When naming your beneficiary, keep these points in mind:
- Who? Your beneficiary can be a person (such as a spouse, child, or friend) or an entity (such as a charity, church, or trust). Your decision may depend on your situation and stage of life.
- How many? You can name more than one beneficiary, and you don’t have to allocate the proceeds evenly among them.
- Can I make changes? You can designate your beneficiaries as revocable (meaning you can remove them without notice) or as irrevocable (meaning you can’t make a change without their consent).
If you don’t designate anyone, the insurance company may delay your application or remind you to do so. If no beneficiary is named at the time of your death, the policy proceeds may be paid to your estate, depending on the policy terms. Because the estate needs to go through court-supervised probate, this can slow down the payout and involve taxes and legal fees—which could reduce the amount paid to your heirs.
Reviewing and updating beneficiaries
Policyholders often treat beneficiary designations as a “set it and forget it” decision. In fact, only about 30% of Americans review or shop for insurance coverage each year—meaning many people may not be regularly checking important policy details such as beneficiary designations.2
Your designations may need to be updated as life circumstances change. Outdated beneficiaries could result in your proceeds going to the wrong person—such as an ex-spouse or a deceased beneficiary’s estate. Beneficiary designations typically override what’s in your will, so regular reviews are crucial.
Be sure to review your beneficiaries after these major life events:
- Marriage or divorce
- New child or grandchild
- Death of a beneficiary
- Major career change
- New home purchase
- Retirement
Make any changes to your designations promptly after a life event, since whatever’s on file with the insurance company determines the beneficiaries, no matter what your intentions. A good rule of thumb is to review your policy annually, to make sure no intended updates fall through the cracks.
One Oversight, Costly Consequences
Consider these scenarios:
The Ex-Spouse
- After a divorce, John updates his will but forgets to update the beneficiary of his life insurance policy.
- When John dies, the proceeds may be paid to his ex-spouse still listed on the policy, instead of his current spouse, subject to applicable law and the policy terms.
- Because death benefits generally pass to the named beneficiary outside the will, the current spouse may have limited or no rights to the proceeds.
The Newlywed Employee
- Maria obtains a life insurance policy at her new job. Since she’s single, she lists her parents as beneficiaries.
- Four years later, Maria is a tenured employee with a husband and a new baby.
- However, she fails to update her beneficiary designations.
- If Maria dies, the policy benefits may be paid to her parents instead of her husband and child.
Conclusion
Naming your life insurance beneficiaries is a critical step to help ensure your legacy passes to the right people. Just as important is updating your beneficiaries as life changes. Be sure to review your policy after life events and at least annually to make updates, so your proceeds are distributed as you intended.
1 GuardianLIfe.com. Guardian’s 12th Annual Workplace Benefits Study. 2025.
2 Independent Insurance Agents & Brokers of America. https://www.independentagent.com/news/only-3-in-10-americans-review-insurance-annually-often-waiting-until-problems-arise/. 2026.
This article is provided for general informational purposes only and is not intended to provide individualized business or legal advice. The scenarios are for illustrative purposes only. Actual outcomes may vary based on the facts and policy provisions. Coverage is governed only by the terms and conditions of the relevant policy.
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