Taking out a life insurance policy is one way to provide for your family in the event of your death. After you die, your beneficiaries will receive the benefits from your policy without the need to go through probate.
However, as the Insurance Information Institute explains, disputes could break out if you fail to clearly identify your beneficiaries. In fact, if your insurer cannot identify a beneficiary at all, the benefits may go to your estate where they will be subject to probate.
Know when to avoid general designations
Describing a beneficiary in general terms without naming the person could either benefit or harm your estate wishes. Writing down that you want all of your children to receive payouts from your policy might cover any children you have or adopt in the future. On the other hand, if you state that your wife or husband is a beneficiary, any ex-spouse you have might try to claim benefits.
Provide complete names
Be sure that you have spelled out the full name of any beneficiary, including the middle name. Sometimes family members have similar or identical names, so there may be the potential for confusion, particularly if one family member has the same name as a parent or grandparent.
Provide Social Security information
Another way to identify a beneficiary is to include the person’s Social Security number. Given that a Social Security number is specific to an individual, putting this information on a beneficiary form may reduce the possibility of confusion, particularly if you have relatives with similar names.
Finally, be aware of changing life circumstances like the birth or death of family members that could cause you to remove or add beneficiaries. Adding contingent beneficiaries to receive from your policy may keep your insurance from passing into your estate and then into probate.