Naming the beneficiary of your personally owned life insurance policy is an important part of your personal insurance plan.
A named beneficiary means that your life insurance proceeds will be payable directly to the named person, people, or charity. The named beneficiary designation enables the life insurance proceeds to by-pass probate and often the funds are protected from creditors. You can name more than one person as a beneficiary of your life insurance and even state a percentage of the benefit each beneficiary will receive. If you are naming a child as a beneficiary of your life insurance please make sure to name a person you trust as the trustee to the insurance proceeds.
When your estate is listed as the beneficiary of your life insurance policy the death benefit proceeds will be distributed as per the terms of your will. It is important to understand that when the estate is the beneficiary of the life insurance policy the death benefit becomes subject to probate and creditors.
If you haven’t reviewed your beneficiary designation in some time it’s advisable to do so. It’s not unheard of for an ex-girlfriend or a deceased parent to still be named as a beneficiary of a life insurance policy. Updating beneficiary designations takes less than five minutes and has no cost.
Beneficiary designations can be simple or may become complex. If you have questions or concerns please call or e-mail our office.
In the link below the “Financial Consumer Agency of Canada” reviews the impact of the beneficiary designations mentioned above.
CI also provides a helpful “Summary on Creditor Protection” available at the following link.
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