Can you change the beneficiary of life insurance?

quick Facts

  • A change of life insurance beneficiary is often required after marriage, divorce and other life changes and can be made at any time as long as the policy is valid
  • With few exceptions, only the policy owner can make changes to life insurance beneficiaries
  • The process for changing a beneficiary differs depending on whether you have a revocable or non-revocable beneficiary

The short answer to the question “Can you change your life insurance beneficiary?” Yes, with several criteria. Knowing who can change the beneficiary on a life insurance policy is extremely important in order for the policy to work as intended, should any changes need to be made.

Many life events can warrant a change of beneficiary, including marriage and divorce, the birth or adoption of a child, the purchase of a home, the creation of a new estate plan trust, or the death of an existing beneficiary.

Understanding what a life insurance beneficiary is and how the beneficiary can be changed helps streamline this process and will empower you to make these key decisions.

What is the beneficiary of life insurance?

A life insurance beneficiary is the person who receives a death benefit upon your death. Often this is a husband, wife, significant other, or dependents.

The beneficiary of life insurance can also be an organization, a trust, or a non-individual.

Some examples of non-individual beneficiary options include:

  • Your real estate
  • A charitable organization that is meaningful to you
  • A legal entity, such as your business or company
  • trust

Many people assume that life insurance is not for them because they do not have a spouse or children. However, if you are recently divorced or your spouse recently passed away, consider these alternative options to make a lasting difference in a way that works for you.

It should also be noted that it often makes sense to designate several persons or entities as beneficiaries and to divide the death benefit based on the corresponding financial needs. Learn more about how to choose a life insurance beneficiary below.

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Who can change a life insurance beneficiary?

As the policyholder, you can only change the beneficiary on your life insurance policy, with few exceptions.

For example, if there is an irrevocable beneficiary listed in the policy or you live in a community property situation, you may need someone else’s permission before making this change. The individual to whom you have given power of attorney can also change the beneficiary on your policy.

These conditions are discussed in more detail below.

Irrevocable life insurance beneficiaries

Changing the beneficiary is more complicated if the life insurance policy has an irrevocable beneficiary designation. An irrevocable beneficiary cannot be excluded or his share of the death benefit changed without his consent. In addition, the irrevocable beneficiary must be notified if the policy is cancelled.

So, why choose an irrevocable beneficiary? Sometimes, you might use one to ensure that a specific person or organization receives a death benefit. However, keep in mind the difficulty associated with changing the beneficiary when you choose this for your life insurance policy.

Change of beneficiaries in a community ownership state

Like an irrevocable beneficiary, spouses also have this type of decision-making power in many states. A handful of community ownership states Require spousal permission to make a beneficiary change, including:

  • Arizona
  • California
  • Idaho
  • Louisiana
  • nv
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

In the case of community property, assets acquired during marriage are considered to be owned equally by both spouses, and life insurance policies fall under the community property category.

In this case, if a life insurance policy is purchased after Married, you will need your spouse’s permission to name someone other than him as a beneficiary on your policy.

Cancellable life insurance beneficiaries

Let’s say you don’t have an irrevocable beneficiary on your policy and you’re investigating options for changing an existing beneficiary. In this case, you’ll likely be wondering who has the right to change a revocable beneficiary.

The good news is that “revocable” means you can change your beneficiary.

When can the policyholder change the revocable beneficiary? A beneficiary change can occur at any time after the policy becomes effective. As long as the policy is still valid and has not been paid off, you can request to change the beneficiary.

How to choose a life insurance beneficiary

The beneficiary must be someone you trust to use the money to take care of eventual expenses, debts, ongoing bills such as rent or mortgage, child care and higher education costs, and other important financial necessities once you die.

In most cases, you can specify multiple beneficiaries, known as primary, secondary, and successor beneficiaries. The primary beneficiary is the person designated to receive the death benefit when you pass away. A secondary beneficiary, often called a potential beneficiary, will receive a death benefit if the primary beneficiary has passed away at the time of payment.

Name your children as beneficiaries

Dependents can only access life insurance benefits if they are 18 years of age or older. Minors will need to wait until they are legal adults unless a guardian has been appointed to access the funds on their behalf.

Choosing a trustee or setting up a trust are two ways to make sure the money is used for the needs of your minor children. Learn more about how to name a minor child as a life insurance beneficiary below.

Appointment of a guardian

Appointing a legal guardian to administer life insurance payments is a common method for identifying minor children as beneficiaries. By choosing a trustee as the beneficiary on behalf of their dependents, the funds must be used to their advantage, and they are able to access the funds sooner than they would without a trustee.

The person who will take care of your children if you die is often the best person to be appointed as your life insurance trustee.

Establish trust

Establishing a trust is another way to ensure that your life insurance benefits go to your children through the trust. While the appointment of a trustee requires only the desire of the prospective trustee, the trust has a cost associated with the setup. Fees are usually required in advance, and a trustee must be named to facilitate payment.

Instead of receiving a single payment like most life insurance policies, the trust can distribute the death benefit at specific times and in certain amounts that you as the policy owner predetermine. However, just as a life insurance policy must be active at the time of death, so too must the credit be in good standing in order to function as intended when it passes.

cooperating Tips for heirs and beneficiaries

As an heir or beneficiary, you are not required to remain with the deceased’s company once the life insurance policy has been paid out. If assets or investments are involved, do your due diligence before adding new assets or making any transfers.

Possible tax implications of changing beneficiaries

Life insurance policies are not taxed when paid to the beneficiary, nor is the policy owner taxed to change the beneficiary. However, in some cases, the life insurance benefit may be considered part of the policyholder’s estate and may be counted as part of the value of the taxable estate.

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Final thoughts on changing payee

Can you change your life insurance beneficiary? Life insurance is meant to protect the people you care about most, so a change in life insurance beneficiary may be necessary after a divorce, upon the death of loved ones, and any other significant life changes.

Reviewing your policy periodically is a proactive way to ensure that the designated beneficiary still makes sense for your current life circumstances. With minimal restrictions in most cases, the ability to change your beneficiary at any time lies with you.

Frequently Asked Questions

Can the beneficiary be removed from the life insurance policy?

Yes, the policy owner can remove the beneficiary or authorize him by the policy holder.

Can you change life insurance beneficiaries after someone dies?

You cannot change beneficiaries after the death of the insured. If they die while the change is being processed, the insurance company decides who should pay.

Can life insurance beneficiaries change at any time?

Yes, the policyholder can change beneficiaries whenever they want and for any reason.

When do you need permission to change the beneficiaries of the document?

If you live in a community property state, you may need your spouse’s consent to name a beneficiary other than him. If you have an irrevocable beneficiary, you need to sign out to remove it from your policy.

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Editorial Tips: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective third party source for all things life insurance. We update our website regularly, and all content is reviewed by life insurance experts.

Rachel Brennan has been in the insurance industry since 2006 when she started working as a licensed insurance representative for 21st Century Insurance, during which time she held her property and casualty license in all 50 states. Several years later, she expanded her expertise in the insurance field, earning a license in health insurance and AD&D insurance as well. I worked for a small health in…

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Rachel Brennan
Licensed insurance agent
Rachel Brennan

Benjamin Carr has worked as a licensed insurance agent at State Farm and Tennant Special Risk. He sold various lines of coverage and advised his clients about their life, health, and property/accident insurance needs. Assessing risk and helping people find the best coverage for their needs is his passion. He appreciates that insurance is designed to protect people, especially in times of…

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Benjamin Carr

Former state farm insurance agent

Benjamin Carr

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