Checking The Beneficiaries Of Your Policies

When February comes around, it’s common to find people scrambling to come up with ideas to celebrate Valentine’s Day with their loved ones. That's perfectly normal, but the celebration of love shouldn’t be just a once-a-year activity. Love, after all, enriches our lives and brings us the much needed supply of endorphins for that feeling of indescribable joy. The very reason why it’s important for you to let your family and friends know that you truly care for them every chance you get.

 

There are plenty of ways for you to express your love for those people right now, but there’s perhaps only one effective way to do it after you pass away – making sure they are beneficiaries to whatever you’re leaving behind.

 

If you have a life insurance policy, you’ve probably already done this. Though, it’s worth noting that a lot of things can change over the course of our lives.

 

You may perhaps have gotten married in the time since you purchased that policy; or you may have had a child; or, as unfortunate as it may sound, you may have fallen out of love with that special someone. These are, of course, just some examples of major changes that can happen in our lives. Regardless of what they are, you should adjust to them accordingly by reviewing the beneficiaries designated in your policies and other aspects of your estate.

 

 

What does it mean to review your beneficiaries?

 

A review essentially involves you once again looking at your policies and deciding whether the beneficiaries you designated are the ones you want to leave your estate to. This ensures that, whoever those people are, they are really the ones you intend to pass on your estate to in the event of your passing.

 

As simple as that sounds, most people actually buy policies and forget to update this information later. There have been many cases where improper designation has resulted in delays of claim, legal battles, and death claims going to people it was not intended for.

 

Knowing this now, you should always remember to review your policies in the presence of a financial advisor. While you can do this on your own, having professional help lets you get the best advice for what to do with your estate.

 

Additionally, it lets you share that responsibility with someone else in case you forget. That’s not to say that the financial advisor should always be the one to remind you when to do this. It just helps to have someone you can immediately call when major changes happen in your life.

 

Look at it sort of like the relationship between a doctor and a patient. The doctor can make recommendations for regular check-ups and tests, but it’s ultimately up to the patient to schedule and proceed with them.

 

When it comes to how often you should do a review, there’s no rule-of-thumb and is mostly a case-to-case basis. For most individuals, it’s recommended that you do it at least once every two to three years. Yet, the best advice here is to always stay in touch with your financial advisor in case anything comes up that requires you to make any changes in your policies.

 

 

Who should you designate as beneficiaries?

 

As to who you should designate as beneficiaries, it’s really up to you. The law, however, bars 3 people from being named as beneficiaries: “kabit na kasama”, “kabit sa krimen”, and “kabit sa korapsyon”.

 

It is always worth consulting with your financial advisor as to who might be the best choices. This is because there are a couple of caveats in deciding who to designate that you should definitely know about.

 

For instance, it’s not wise to name minors due to them not being able to make a claim until they become legal adults. Insisting on this decision can likely lead to greater expenses down the line.

 

In these situations, it’s advisable to just leave the money to a trusted adult, who can hold on to it for minors until they become of age. This is just one way of getting around the problem. As previously mentioned, a lot of the nitty-gritty depends on your own situation.

 

For middle-aged individuals, it also becomes less and less practical to have your parents as your beneficiaries, given the chances of them outliving you. It’s not a pleasant thought, but you have to be realistic.

 

Another thing worth mentioning; you might also want to write a will or create a trust on top of designating a certain person to be beneficiary of your life insurance policies. Note that choosing to go this route can take much longer and can be really expensive as it has to go through a court.

 

Again, you’ll never know for sure what course of action fits best for your specific needs until you talk to a financial advisor. For that reason, it cannot be understated how crucial your relationship with him or her will be in dealing with these matters.

 

Remember, these professionals are not just limited to selling insurance policies and investments. They can guide you in just about everything that has to do with your financial situation. So be open to them. Let them know about what’s happening in your life. That way they can properly help decide on the right beneficiaries and heirs of life insurance policies you own as well as other aspects of your estate.