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Life Insurance: Check Your Beneficiary Designation

iStock_000008633067SmallLife insurance is a great way to make sure your loved ones are secure in the event of your passing. While the rest of the estate can take months to process in court, a life insurance payout gives much-needed security to your designated beneficiary soon after your passing. However, in some cases, the life insurance payout can also become tied up in court. The following are some examples of confusion and legal that can occur due to an unclear beneficiary designation:

You forgot to change your beneficiary after a divorce or remarriage. If your life insurance policy designates your former spouse as the beneficiary rather than your new spouse (or new person of your choosing), you can’t be sure that the correct person will receive the money after your death.

You were subject to undue influence at the time you completed your beneficiary designation form. You probably already know if this was the case, but make sure there are no reasons someone claim otherwise. Otherwise your intended beneficiary might find themselves stuck in court trying to prove they are the rightful beneficiary of your life insurance policy.

The insurance company makes an error in regard to your beneficiary designation. This is extremely rare, but it could happen. Review your life insurance policy regularly to make sure everything is up to date.

You made an error when completing your forms. In this case, the insurance company will make your life insurance policy payable to the estate, rather than your intended beneficiary. This can delay disbursement of the funds.

There are other ways in which a life insurance beneficiary designation can become confused or the subject of scrutiny in court, but these are some common examples. To ensure everything goes as planned in the event of your passing, review all documents regularly and you can rest assured everything will go as planned when the time comes.