Who Gets the Life Insurance Money?

by MSO

Even if you've been divorced for years, your ex-spouse will get the money from your insurance policies unless you change your beneficiary.

What happens if you forget to name your new spouse as your insurance beneficiary instead of your ex-spouse and you pass away?

Insurance products such as individual life insurance, group life insurance, RRSPs administered through insurance companies, registered annuities, non-registered annuities and variable annuity contracts all include beneficiary designations.

North American courts are full of cases that concern beneficiary disputes – spouses and ex-spouses, children and step-children all battling for the money after you die. Anyone can contest a beneficiary named on a life insurance policy but your chance of winning is slim even if you are the spouse of the policy holder.

In most cases a legal divorce does not mean that the ex-spouse will automatically be removed as the designated beneficiary. You have to change the beneficiary on your policies. The only exception occurs if you named an irrevocable life insurance beneficiary on your policy which means that you, as the policy holder, cannot change it without that beneficiary’s consent.

Some people mistakenly believe that naming a new beneficiary of your life insurance policy in your last will and testament will be enough. It’s not, the beneficiary named on your actual life insurance policy will invariably get the money. That’s why it’s important to revisit your insurance polices after a life changing event such as a divorce or a death as soon as possible.

Changing your beneficiary is a quick and easy process. The first step is to contact your insurance company to obtain the appropriate forms to change the beneficiary. Many insurance companies even post these forms on their websites, you can simply print them out, fill them in and email them back. Some companies may even let you change your beneficiary online. If these forms are not available online, call and request the proper change of beneficiary forms from your insurance company.

Most insurance companies will send you a letter or email confirming that your change of beneficiary has been received and accepted. If they don’t provide this document after thirty days, call and ask for confirmation. Place this document with all your other estate planning papers so that your estate planner or the executor of your will has ready access to the information.


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