Who should be your life insurance beneficiary?

A life insurance beneficiary is the person (or people) who stand to inherit a cash payout if you were to pass away during your life insurance policy term. If you’re keen for your family to enjoy financial security when you’re no longer around, knowing how to choose beneficiaries for your life insurance is therefore of the utmost importance.

It’s not compulsory that you name a life insurance beneficiary when taking out a policy. However, if you want to ensure that a specific person will receive the funds in the event of a payout, you will need to choose a beneficiary.

It’s important to understand the UK’s regulations for beneficiaries. Before taking out one of our policies, you should bear in mind the following:

• When getting life insurance, name at least one beneficiary.
• Your beneficiary needs a death certificate to make a claim after you pass away.

You can choose whoever you like to be your life insurance beneficiary, whether that’s a spouse, sibling, friend, or someone else. It’s important to note that with Legal & General, you’ll need to use a trust in order to name a life insurance beneficiary. If not, any cash sum from a life insurance payout will be made as a direct payment to the legal owner of the policy. If they’re deceased, it will be paid to the legal owner’s personal representative, which is often the executor of the will.

In theory, yes. However, the person who is legally entitled to receive the cash sum must have a UK bank account. So in practice, the trustee, executor or administrator would receive the funds and be responsible for transferring it overseas if the beneficiary lived abroad.

You can only change the beneficiaries of a life insurance policy in certain circumstances if you’ve written a life insurance policy ‘in trust’. If you take out a Discretionary Trust, your trustees will have the freedom to change the beneficiaries of the Legal & General life insurance policy. They can also decide how much money the beneficiaries would receive from a payout. However, you won’t be able to change or add beneficiaries to your life insurance policy if it’s been written into an Absolute Trust. Read more about the benefits of writing a life insurance policy under trust.

You can add a beneficiary to your life insurance plan when you first write your policy into a Discretionary Trust, or at a future date. To add a beneficiary, ask your insurer for a ‘change of beneficiary’ form, which you can sign and return by email or post.

Yes, it’s possible to have more than one life insurance beneficiary. This can be achieved by the policyholder placing their life insurance policy under trust or including it in their will. If neither of these options are chosen, then, in the event of a valid claim, the lump sum would form part of their estate. This would be subject to the rules of intestacy which means only married or civil partners and some other close relatives can inherit. Unfortunately anyone who does not fall in to the above list, for example, unmarried partners, financial dependents or any other beneficiary will not benefit from the life insurance payout and they may need to seek legal advice.

If your primary beneficiary dies before you – the legal owner of the life insurance policy – then your payout would eventually be paid to any ‘contingent beneficiaries’ you’ve named. If there are no beneficiaries left, the money is likely to be paid directly to your estate and then distributed through the probate process.

Legal & General will pay a life insurance payout to the legal owner of a policy, so how the money is then distributed is up to the trustees, executors or administrators of the estate.