What's involved in updating a life insurance beneficiary?

Start by getting in touch with the life insurance company or local agent. There will be paperwork to return with specifics on the beneficiary's name, contact information, social security number, birth date, relationship to you, and more. If the beneficiary is a trust, the insurer will need the trust's name, address, tax identification number, date opened, and type of trust. Get legal advice if your beneficiary is a young child or an individual receiving income-based government aid. Minors cannot directly receive life insurance benefits. Policy proceeds may impact government aid status or have tax implications.

There are two types of beneficiaries. The primary beneficiary receives policy proceeds upon your death. Be prepared to specify how the benefit should be shared (by percent) if you name more than one primary beneficiary. Also, consider how benefits should be divided if a primary beneficiary passes before you do. Money can be split within the deceased beneficiary's family branch or equally among eligible individuals. Consider naming a contingent or secondary beneficiary to receive policy proceeds should all primary beneficiaries predecease you.

Be aware there are two classess of beneficiaries - revocable and irrevocable. Confirm which type applies to your policy. The policyholder can change a revocable beneficiary without notification. An irrevocable beneficiary cannot be changed without that individual's signed consent. 

Finally, make your beneficiary aware of the life insurance policy and where to find it upon your passing.