5 ways to protect your life insurance beneficiary

To ensure that your loved ones get the death benefit payout, you need to take a few precautions when designating your life insurance beneficiaries.

Nupur GambhirAmanda Shih author photo


Nupur Gambhir

Nupur Gambhir

Life Insurance Expert

Nupur Gambhir is an insurance editor at Policygenius and licensed Life, Health, and Disability agent in New York.


Amanda Shih

Amanda Shih

Editor & Licensed Insurance Expert

Amanda Shih is an insurance editor and licensed Life, Health, and Disability agent at Policygenius in New York City. Her work has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.

Updated November 24, 2020|4 min read

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The most important part of your life insurance policy is the death benefit — it’s likely why you’re purchasing a policy to begin with. And there are some steps you can take now to guarantee that your life insurance payout goes to the right people in the right amounts, and without difficulty or delay for your loved ones.

This doesn’t just apply to buying your policy — there are factors to be cognizant of throughout your policy’s term, which could be 10-30 years or more. Keeping your policy up to date and customizing some key details in beneficiary designation can protect your life insurance policy — and more importantly, the ones you love.

Key Takeaways

  • Your policy should always list a contingent beneficiary to accept the death benefit if the primary beneficiary is no longer alive to do so

  • You can designate what percent of the death benefit each of your beneficiaries receives

  • Adjusting your beneficiaries with every big life event can prevent the death benefit from being paid out to your estate

Name a contingent beneficiary

When you designate your life insurance beneficiaries, you’re listing your primary beneficiary (or beneficiaries). But you should also list a contingent beneficiary, who gets the death benefit if all the primary beneficiaries are unable to accept it, usually because they have predeceased you.

Without a contingent beneficiary to accept the death benefit, the funds will be paid out to your estate and go through the probate process. This can be lengthy and could delay access to the money, potentially putting your dependents in a fraught financial position. Many people name a trusted family member or a trust account as a contingent beneficiary.

Determine if the death benefit is per capita or per stirpes

Is your death benefit per capita or per stirpes? A per capita death benefit pays out to all your beneficiaries equally. If you list two people as your beneficiaries and one of them dies, the living beneficiary gets the entire death benefit.

When you’re buying life insurance, the death benefit defaults to a per capita payout, and for most people, that works. But sometimes this can be problematic — for example, if you list your spouse and your business partner as your policy’s beneficiaries and you and your spouse die, then your business partner would get the entire death benefit. If you have children, they would get nothing.

With a per stirpes death benefit, if you list your spouse and your business partner as your policy’s beneficiaries and your spouse dies, your business partner still gets their allotted percentage of the death benefit. But, the death benefit amount meant for your spouse would go to their heirs — in this case, your children. Specifying a per stirpes death benefit guarantees that your children will be financially secure, even if their guardian passes away.

Determine what percent each beneficiary receives

If you list multiple primary beneficiaries on your policy and both aren’t meant to receive an equal split of the death benefit, then you will need to list the exact percentage each beneficiary receives in your policy.

For example, if you run a business and want to leave 70% of the death benefit to your spouse and 30% to your business partner, you need to designate this in your life insurance policy clearly so that your benefit is paid out according to your wishes. If you don’t, they will receive an equal 50/50 split, which could leave your spouse on the hook for expenses that your life insurance policy was supposed to cover.

Update your policy regularly

You should update your life insurance policy with every big life change — such as having a child, going through a divorce, or experiencing a death in the family. Not adjusting your policy accordingly can impact the people you are buying a life insurance policy to protect.

If your spouse is your life insurance beneficiary and they die but you don’t update your beneficiaries, your death benefit would pass either to a contingent beneficiary or your estate after your death, rather than your children or your spouse from a second marriage. Similarly, if you take on a large loan, like a mortgage, you should increase your coverage to at least equal what you owe so that if you die, your loved ones aren’t left with a debt they can’t pay.

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Set your beneficiaries up for success

What’s the point of a life insurance policy if your beneficiaries don’t even know it exists? The life insurance death benefit isn’t always paid out by insurers automatically when you die, so your beneficiaries will need to file a death benefit claim to receive it. Lost policy details can be found, but you can save your loved ones additional grief by leaving them the information they need from the get-go.

To initiate the claims process, all your loved ones will need to know is which life insurance company you purchased a policy through and your full name to locate your record. To file a claim, they’ll also need to prove their identity and provide a copy of your death certificate.

Ensure that the people you’re paying your monthly (or annual) premiums to protect actually get this protection by giving them clear and concise information about the life insurance policy you’re taking out, updating your paperwork after major life events, and making sure your policy will pay out the amounts you want to the people you intend to support when you’re gone by customizing the death benefit payout and naming contingent beneficiaries.

5 ways to protect your life insurance beneficiary FAQ:

Who should I name as a life insurance beneficiary?

Most people name a family member as their primary beneficiary, but it depends on who you want your policy to support when you’re gone. If you have a business partner or want to support a specific charity, you can add them to your policy.

How can a beneficiary file a claim?

Beneficiaries can file a life insurance claim by contacting your insurance company and providing your full name. They’ll need to share information to prove their identity and your death certificate.

Can I change the beneficiaries of my life insurance?

You can and should update your life insurance beneficiaries as your life changes to ensure your death benefit goes to your current dependents. You can do this by filling out a change of beneficiary form with your insurance provider.

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