Category Archives: Life Insurance Planning

IS THE RIGHT PERSON GETTING YOUR MONEY? Life Insurance Beneficiary Designation

The Bad Life Insurance Beneficiary Designation

Since 1968, our insurance office has handled many Life Insurance death claims, and seen some unfortunate cases where a bad life insurance beneficiary designation directed death benefits to unintended recipients e.g. old and long forgotten girlfriends, boyfriends, former spouses (even the wrong former spouse), and

A Good Life Insurance Beneficiary Designation

so on. Please be advised your Will or Living Will (Revocable Living Trust) cannot override a life insurance beneficiary designation in California. What this means is if you intend your trust to receive life insurance benefits directly from the insurance company, then it is necessary that your life insurance beneficiary designation be updated to include the trust/trustee’s name. Failure to do this has unintended consequences.

Unintended Consequences

For example, we recently handled a death claim in which the deceased’s disabled son was named beneficiary, and a Special Needs Trust had been established. However, the insurance company refused to pay death benefits directly to the trust/trustee because the trust was not mentioned in the beneficiary designation. Such a situation has negative implications for State and Federal disability benefits. We all want to avoid unintended consequences. If you have any type of trust, we encourage you to discuss the issue of the life insurance beneficiary designation with your attorney and update personal, employer and union sponsored life insurance policies accordingly..

Remember, your employer, union, retirement plan administrators, and your private insurance policies all have separate life insurance beneficiary forms. Keep a list!

The Beneficiary Form

Now is the perfect time to review your Life Insurance Beneficiary Designation. There are two areas on most Beneficiary Change forms, which require completion in order to name or change your Beneficiary:

1). Primary Beneficiary Name
2). Contingent Beneficiary Name

How it works: If you die while the Primary Beneficiary is still living, the Primary Beneficiary (or Beneficiaries) will receive 100% of the policy benefits, and the Contingent Beneficiary will receive zero benefits. Remember, the Contingent Beneficiary is a “back-up” beneficiary, in the event your Primary Beneficiary has pre-deceased you. Also, it is acceptable to name more than one Beneficiary by listing each name, with the corresponding amount of insurance.

Life Insurance Beneficiary Designation Examples

For example: John Smith, Brother, born March 21, 1963- $50,000 and Sally Smith, Sister, born August 1, 1959- $100,000.

If the Beneficiaries are receiving equal amounts, then you may state “Equal Shares” after their names. Please do not name minor children as Primary Beneficiaries nor as Contingent Beneficiaries. This leads to all sorts of problems, as the insurance company will not pay death benefits to a minor. Your survivors will be required to go to court and ask a judge to name a financial guardian. Even if the judge appoints the same financial guardian as requested in your Will, the court’s permission may still be required for certain types of investment decisions. A mishandled life insurance beneficiary designation results in a cumbersome, frustrating, and costly way of fulfilling your wishes.


Let’s be smart and think: Is the right person getting my money? Review your life insurance program today!