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How To Change a Beneficiary on a Life Insurance Policy

UPDATED: December 16, 2019

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A life insurance beneficiary is an assigned person who will receive payment of your life insurance money in the event of your death. In most circumstances, a life insurance beneficiary change is as easy as contacting your agent and filling out a new beneficiary form. However, there are some circumstances when the process can be more involved.

Permanent Life Insurance Beneficiary

Whether it's due to incapacity or contract, some life insurance may be assigned to a permanent beneficiary. These policies are typically funded by someone other than yourself for a particular purpose. For instance, a co-signer on a loan may require a life insurance policy for the amount of debt owed in case of death. In these cases, the beneficiary cannot be changed.

Divorce Settlement

It is especially common to find life insurance requirements in a divorce settlement. Typically each ex-spouse is expected to maintain a policy for a given amount as a means of funding any remaining spousal or child support in the event of death. These life insurance policies cannot be changed without the express agreement of both people. Otherwise, you run the risk of possible fines from the court for the life insurance beneficiary change.

Spendthrift Beneficiary

If you have left a large sum of life insurance to someone you feel is not responsible enough to care for the funds or that has a sizable amount of debt, you may wish to make a beneficiary change. If you still wish to benefit the first beneficiary, you can change the beneficiary to a trust set up in your will. By placing the funds into a trust, you are assigning a different person to handle the assets, but still providing for the (irresponsible) beneficiary.

Beneficiary Changes in a Will

In order to properly change the beneficiary of a life insurance account, you must change the listed beneficiary with the insurance company. It is established law in every state that ordering changes of beneficiaries in your will is not sufficient to override the existing contract. This protection was enacted by the courts because too many individuals were attempting to use their wills as a means of avoiding the requirements of beneficiary-related contracts while they were living. The law states that the listed beneficiaries of the insurance company are the only valid beneficiaries.

Legal Help with a Life Insurance Beneficiary Change

If you are unsure of whether or not you can change the beneficiaries of a life insurance policy, or are having difficulty completing the task, consult with an estate planning attorney.

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