A life insurance policy is designed to protect the most important people in your life, but life is always changing –  and that means sometimes your policy beneficiaries need to change, too.

Since people often have the same life insurance plan for decades, it’s not uncommon to want to change who will receive the payout, also known as a “beneficiary.” So what if you need to change your beneficiary? And who can authorize a beneficiary change on a policy?

Here’s what to know to make sure your payout goes exactly where you intended.

What is a life insurance beneficiary?

A beneficiary is the person you choose to get the payout from your life insurance policy once you die. A beneficiary can be a person, like your children or spouse, or an organization, like a charity. You can also opt to split the payout between multiple beneficiaries.

Naming a beneficiary is important to make sure your life insurance payout goes to the right place once you’re gone. If the beneficiary information is missing or outdated, the policy could end up in court or even turned over to the state if your insurance company can’t locate someone to claim the payment. According to the National Association of Insurance Commissioners, millions of dollars in life insurance go unclaimed each year because the beneficiaries can’t find the policies – or don’t even know a policy exists.

Can I change the beneficiary on my policy?

Big events like marriages, new babies, or the passing of a family member not only shape our lives, but also our financial plans. If you already have life insurance, you might decide you want to add someone as a beneficiary, like a child, or remove someone, like an ex-spouse.

When deciding to change a beneficiary, there are several things to keep in mind:

• You can name primary, secondary, and final beneficiaries. This allows you to make sure the money goes where you want in case something happens to one of your beneficiaries. For example, if your primary beneficiary dies in the same accident as you, the payout would then go to the secondary beneficiary, and so on.
• Children under 18 cannot be paid directly. If any of your primary beneficiaries are minors, you’ll need to set up a trust fund or other ways to manage the funds on their behalf until they are an adult.
• Social Security Income and Medicaid can affect payouts. If the beneficiary is on Social Security Income (SSI) or Medicaid, receiving the payout can affect their eligibility for benefits. Talk to your financial advisor about the specifics for your situation.  

Beyond major life events, it’s good to check in every few years to ensure that the beneficiary you listed still makes sense based on your current situation and circumstances. Also, make sure to let your  beneficiaries know how to claim the payout, so there’s no confusion or stress during a time when they’re already grieving.

Who can change the beneficiary on a life insurance policy?

Requesting a change of beneficiary is simple. In most cases, you’ll just need to request the proper forms from your insurance company and provide basic information on the new beneficiary.

If you’re wondering, “Can my spouse change the beneficiary on my policy?,” the answer is no, in most cases. For your protection, most insurance companies will only let the owner of the policy grant a beneficiary change so that a spouse (or ex-spouse) can’t make any changes on a whim.

An individual who is granted power of attorney (POA) by the policyholder may be able to designate a beneficiary on the policyholder’s behalf, however. If you grant your spouse a POA, for example, and something happens to you, that means they can likely make changes to your policy.

If you’re considering an update, keep in mind that there are two kinds of beneficiaries:

• Revocable, which means the owner of the life insurance policy can change the beneficiary at any time without notifying the previous beneficiary
• Irrevocable, which means the owner of the policy cannot change the beneficiary without that individual’s consent

Your insurance company can let you know the specifics of your plan and make changes to your beneficiary based on what your policy allows.

Still have questions?

Naming a beneficiary for your life insurance policy is an important step not only in your financial planning, but also your family’s financial future – and knowing how to change a life insurance beneficiary can help ensure that planning goes smoothly.

If you have questions or need to change your beneficiary on an existing plan, give our team a call.

At Fidelity Life, our goal is to make life insurance simple, affordable, and understandable for everyday families. This content is intended for educational purposes only. Each post is carefully fact-checked, reviewed, and updated regularly to ensure the information is as relevant as possible.