Choosing final expenses insurance beneficiaries

Do you know who will receive your assets after you’re gone? If not, it may be time to get acquainted with the process of nominating beneficiaries.

Choosing beneficiaries for your final expenses insurance is an important step, and there are a few things to consider when making this decision. Whether you want to choose multiple beneficiaries or have an irrevocable beneficiary in mind, we're here to explain all you need to know about making that choice.

What is a beneficiary, and who can be a beneficiary?

A beneficiary is a person designated to receive benefits, assets, or payments from an account, insurance policy, will, or trust after the account or policyholder passes away.

A beneficiary can be:

• An individual: A spouse or partner, a child, grandchild, other family member, or a friend.
• A charity or organization: Such as a registered charity, religious institution, or non-profit charitable organization.
• An estate: If you don’t name a beneficiary, your assets may go to your estate, where they are distributed according to your will.
• A trust: Some people set up a trust for minor children and name the trust as the beneficiary.

Types of beneficiaries include the primary beneficiary, which is the first person in line to receive assets, and the contingent beneficiary, which is the backup if the primary choice cannot or does not accept the assets.

It's also possible to make an irrevocable beneficiary designation, which means this person has a guaranteed right to receive the death benefit from the life insurance policy. The policy owner can’t change the beneficiary designation or the terms of the policy without the irrevocable beneficiary's written consent. This type of beneficiary is often used to ensure financial security for family members.

In Quebec, if you name your legal spouse as your primary beneficiary, they are automatically considered irrevocable unless you specify otherwise or if you divorce. It's important to carefully consider any life changes that could impact who you would like your assets to go to before designating an irrevocable beneficiary.

With FiftyUp Final Expenses Insurance, you can choose up to five beneficiaries to split your assets amongst, which means allocating a percentage of your final expenses insurance or assets to each party. An example of this could be allocating 50% of your assets to your spouse and 50% to your child, for a total of 100%.

What happens if I don’t name any beneficiaries?

When you open a bank account or buy a life insurance policy, you usually get the option to name a beneficiary. If you don’t name a beneficiary, instead of your money or assets going straight to a designated person, they go into your estate.

From there, a few things can happen:

• Your will decides: If you have a will, your estate will likely be distributed based on the wishes you outline in your will.
• The government decides: If you don’t have a will, the province steps in and follows intestacy laws to decide who gets what (usually starting with your spouse, then kids, then other relatives).

When your assets go through your estate, there can be delays, taxes and even legal fees involved. If you have debts, creditors may get first dibs before your loved ones see anything.

This is why naming a beneficiary can be a smart move. Having a primary and contingent beneficiary can skip all the legal hassle and allow the money to be allocated directly to the people or entity you chose, faster and with possibly fewer deductions.

How do I pick a beneficiary?

Picking a beneficiary is a big decision, but it can be easier if you break it down and consider the following:

• Who do you want to help most: If there’s anyone who depends on you financially, like a spouse or kids, you can think about naming them as your primary beneficiaries. Most people choose their spouse, children, or a close family member, but you can also choose a friend, charity, or a trust if that aligns more with your wishes.
• Consider the practical side: If you leave money directly to a child under 18, it won’t go to them. Instead, it will be put in a trust, and their guardian will manage it until they’re old enough. You may need to set up a formal trust if you want more control over how they receive the funds.
• Choose backup options: Life is unpredictable, so it’s good to have a contingent beneficiary - someone who receives the asset if your first choice passes away before you.
• Keep it updated: Big life changes like marriage, divorce, or having kids might mean your original choice no longer makes sense. Check your beneficiary designations every few years to make sure they still reflect your current wishes.
• Make it legal: For things like life or final expenses insurance, you can update your beneficiary directly with the insurer. But for assets covered by a will, you’ll need to update your will if you change your mind officially.

Is it difficult to change my beneficiaries?

Changing your beneficiaries is a straightforward process and can usually be done within a few days for financial accounts. Life can be unpredictable, so it’s smart to keep your beneficiaries updated according to your circumstances.

Life changes that can impact your choice of beneficiary are:

• Marriage
• Death
• Divorce
• Birth of a new child

Updating your primary and contingent beneficiaries whenever you have major shifts in your life can help protect your loved ones and your assets when the time comes.

Contact your insurance provider

Want to update your insurance beneficiaries? Reach out to your insurance provider. If you have a FiftyUp Final Expenses Insurance policy, you can do this by logging into your online portfolio and selecting the option of 'update beneficiary.'

Submit your documentation

Fill out the beneficiary change form and provide any required supporting documents (for example, some require a spouse’s written consent to change the beneficiary).

Submit everything according to the insurer’s instructions - some allow email or online submission, while others might require you to mail or fax the form.

Communicate the changes to the relevant parties

If you’ve removed or added a beneficiary, let the affected people know, especially if they were expecting to inherit from your assets.

If your beneficiary is listed in a will, update it with your lawyer to keep everything aligned. It's also best to keep a copy of the confirmation for your records in case of future disputes.

Protect your loved ones with final expenses insurance

Now that you’ve got your beneficiaries in order, it’s important to make sure you’ve got the right protections in place in case of the unexpected.

FiftyUp Final Expenses Insurance helps your loved ones pay for immediate expenses after you pass away. You could leave up to $25,000 to help with things from the cost of a funeral service to leftover bills. Find out how FiftyUp Final Expenses Insurance can help you.