Relationships between people can change based on life events, unavoidable circumstances, etc. Whether it be the birth of a child, marriage, or a divorce settlement, these changes commonly change your priorities and future goals.
Financial planning is one area where changing priorities can impact your decisions, especially regarding a term plan. It is now easier to purchase a term plan online and compare different plans with the term insurance calculator. But can you change a beneficiary during the tenure of the policy?
Let’s find out!
Steps to Change Your Term Insurance Beneficiary
In a term plan, you need to nominate a person as a beneficiary who will then be entitled to receive the death benefits of the plan in case of your untimely demise. You can either have a primary beneficiary or a contingent one.
The primary one is directly in line to receive the claim settlement, and the contingent comes into play if the primary beneficiary is unable or unwilling to receive the claim amount.
Here is how you can change your insurance beneficiary:
- Reassess Your Current Policy
To make any changes to your current policy, you need first to reassess the terms and conditions of the policy to understand any underlying guidelines or restrictions related to changing the beneficiary. You need to clearly understand the premium, coverage, and other necessary details before making this big decision.
- Choose Your New Beneficiaries
Finalising the new beneficiary is important before you begin the beneficiary change process. It considers your current responsibilities, future financial goals and circumstances. People commonly choose their spouse, child or children, immediate family members like parents, etc
- Get in Touch with the Insurer
Once you have decided on your new beneficiary or beneficiaries, you need to contact the insurer to update them regarding the change requirement. Today, most insurers allow these requests to be fulfilled online for better convenience. You can also visit the insurer in person to start this change process.
- Fill Out the Necessary Forms
You can download the required forms directly from the insurer’s website to change the beneficiary. There are primarily two important things you need to take care of. Now, your main job is to fill the beneficiary change form carefully with all the details regarding the policy, current beneficiary, new beneficiary, relationship between the two of you, etc.
- Submit All the Forms and Other Documents
Once you complete the form, add any supporting documents the insurer requires to complete the application for changing the beneficiary and submit to process your request.
- Wait for Confirmation
Once you complete the process, you need to wait for the confirmation letter from your insurer about the change of beneficiary. If necessary, the insurer might also contact you to submit any other supporting documents.
- Always Keep a Record
Given the importance of a beneficiary, a proper copy of all the necessary documents submitted and received during this beneficiary change process should be stored properly. These documents are a part of your financial decisions and thus require proper care.
Mistakes to Avoid
- Not reviewing the policy frequently causes slower updates in the policy terms and conditions as per changing financial goals and objectives.
- Not adding more than one beneficiary to your term plan. You can add multiple primary beneficiaries to the term plan to ensure equal division of financial support to your loved ones.
- Being unaware of the different tax implications that can impact the policyholder, especially in case of changing the beneficiaries.
- Filling out the beneficiary change form without double-checking the details.
- Not updating the new beneficiary or beneficiaries about the change.
To maintain the policy benefits and ensure that your family or loved ones are always financially protected, changing beneficiaries in a term plan is necessary if personal connections have changed.
You need to understand the step-by-step process of requesting a change in beneficiary from your insurer to enjoy a quick and comfortable experience. Keep assessing your term plan regularly to know the terms and conditions or guidelines to keep in mind while filling out the beneficiary change form and protect your loved ones.