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Actions Why You Should Name Beneficiaries
Key takeaways
- Naming beneficiaries ensures your money will go where you want.
- This simple move can save your loved ones time—and money.
- Review your beneficiaries whenever your situation changes.
Have you named or updated beneficiaries for your financial accounts? You should. From savings to investments to insurance, it’s an important, simple detail you shouldn’t overlook.
What is a beneficiary?
A beneficiary is a person or organization that will receive some or all of your account proceeds if you die. You can “designate” individual or multiple beneficiaries, including a trust or your estate, for each account. You can also designate “secondary” or “contingent” beneficiaries for your accounts if your “primary” beneficiary is no longer there to receive them.
3 reasons to name a beneficiary
- It eliminates confusion. Having a current beneficiary on file for all your accounts leaves no doubt about where you want your money or insurance proceeds to go.
- It saves time (and maybe money). If you die without naming beneficiaries, it will take time—maybe lots of time—for the funds in your accounts to go where you wanted. Depending on the account and where you live, your state or retirement plan could make key decisions for you—even if you have a will. Your funds could be delayed in the legal probate process, and the person in charge of your estate could face a lot of paperwork. Meanwhile, if some of your money is meant to cover your funeral expenses, your loved ones could be left with the bill.
- It ensures your loved ones’ financial wellness. This is especially important with life insurance, which typically provides money to replace income and cover things like funeral costs.
Keep them current
You should name a beneficiary whenever you open a financial account or buy life insurance. But as your life changes, it’s just as important to review—and maybe update—the beneficiaries on all your accounts. Things like marriage, divorce, a new child and death of a loved one can affect your financial plans and your beneficiary information.
It’s easier than you might think
You can usually name and update beneficiaries online in a few minutes. You’ll just need basic information about them:
- Full legal name (of person or organization)
- Mailing address
- Phone number
- Social Security or ID number (if it’s not for a person)
- Date of birth (if applicable)
What you can do next
Check your financial accounts and insurance policies to make sure you’ve named beneficiaries—and that they reflect your current wishes. If not, update them accordingly. Be sure to name beneficiaries when you open new accounts. And anytime your financial situation changes, review your beneficiary designations to keep them current.
Footnotes
John Renz is a vice president and Creative Director at Prudential.
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