Avoiding Common Mistakes with Life Insurance Beneficiaries

How to leave your life insurance to your beneficaries

This is part two of a two-part series on life insurance. If you have not read part one, I recommend that you do so before reading this blog. Tying your insurance policies into your estate plan is important to ensure that there is no conflict.

Life insurance provides protection for your family and business, offering assurance that they’re cared for and your hard work endures. However, without aligning it with your estate plan, this beacon can flicker, leading to unintended consequences. Life insurance and estate planning should go hand in hand.

These days, there is no one dominant type of family unit. This makes estate planning and life insurance interesting. Who do you want to ensure is protected when you are not around?

Under-Age Children

One potential issue arises when children are listed as beneficiaries. Should any child be under 18 at the time of your passing, their share is held in trust until they come of age. Then, they receive their inheritance outright—an enticing yet daunting prospect for an 18-year-old.

The Surprise Child

Then there’s the “oops” factor. Life evolves, and sometimes, a new child joyfully disrupts your plans. If your life insurance doesn’t keep up with these happy surprises, your youngest may be excluded from the policy, a situation no parent intends.

The absence of a secondary beneficiary can also weave a complex legal tapestry if your spouse, the primary beneficiary, predeceases you. Without a clear succession plan, your children could face a protracted battle with insurance companies—a scenario best avoided.

Blended Families

Over 40% of households in the United States today have stepchildren. Blended families present their own unique set of challenges. Ex-spouses and step-children enter the equation, stirring up a mix of legal questions that may require judicial intervention, especially if the documentation has not kept pace with life’s changes. Such disputes can erode the very assets meant to support your family, leaving only the lawyers in a better position.


And let’s talk about trusts. Without a designated backup, if your spouse—the primary beneficiary—passes before you, the funds may default to your estate rather than the trust. Absent a pour-over will, this detour can send your family through the probate process, a road fraught with delays and expenses.

These pitfalls underscore the value of ongoing conversations with an estate planning attorney. Ensuring your life insurance reflects your wishes isn’t just prudent—it’s vital to caring for those you love.

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