Beneficiaries: the mistakes that cost

In short

The beneficiary decides whether, when and how the money reaches your people, and is not necessarily your heir. The costliest mistakes are forgotten changes: a child not added, a beneficiary who died, a former spouse still on the policy.

• Gather all your life policies, including any through your employer, and write down each one’s beneficiary.
• Replace “legal heirs” with names, if that is what you want.
• If you have minor children or an unmarried partner, talk to a lawyer about a will and who manages the money.
• Check your beneficiaries after every big change: marriage, a child, a separation, a death.

Named beneficiaries or “legal heirs”

When you write names (for example “my wife Maria, 50%; my son Andreas, 50%”), your intention is clear. When you write “legal heirs”, the money is shared as succession law sets out, which may include people you did not have in mind, and the process may need more documents and time. Both are legitimate; they differ in how much you control the outcome.

Name a second (contingent) beneficiary too, in case the first is no longer alive. And write the details precisely: full name and relationship, not just “my children”.

When the beneficiary is a child

A minor usually cannot manage a sum of money on their own. Someone will do it on their behalf, and that is decided by law and, depending on the case, by a court. If the parents are separated, or you want a particular trusted person to manage the money, talk to a lawyer about the right solution, such as a will or a trust. See also our article on child maintenance after divorce.

Unmarried couples, and after a divorce

If you live with your partner without marriage or a registered civil partnership, your partner may not be your heir under the law. If you want to protect them, the safest route is to name them explicitly as beneficiary. Check with a lawyer what applies to your situation.

After a divorce, an old policy may still name the former spouse. Do not assume it changes by itself. Decide deliberately: perhaps you want the children, perhaps someone else, perhaps the former spouse is the right choice because they are raising the children. What matters is that it is your decision and written down correctly.

Beneficiaries that were forgotten

The most expensive mistakes are not mistakes of intention. They are forgotten updates: a second child never added, a beneficiary who has died, a policy through an employer no one remembered. Keep one page with every policy and its beneficiaries, and tell someone you trust where it is.

Questions worth asking

• Who is the beneficiary on each of my policies today, and with what shares?
• Is there a contingent beneficiary if the first is no longer alive?
• If the beneficiary is a minor, who will receive and manage the money?
• How do I change a beneficiary, and how do I get written confirmation of the change?
• Has the policy been assigned to a bank? Then who receives what, and in what order?

What you can do now

• Gather all your life policies, including those through an employer, and write down each one’s beneficiary.
• Replace “my children” or “legal heirs” with names, if that is what you want.
• If you have minor children or an unmarried partner, arrange a talk with a lawyer about a will and who manages the money.
• Set a reminder: check beneficiaries after every marriage, birth, separation or death in the family.

Every policy has its own terms. What we write here is general information, not advice; for your own case, what your policy says applies, and it is worth confirming it in writing with your insurer.

Read also: When something in your life changes · Child maintenance after divorce · When someone close to you dies

If you would like a second look, book an appointment with an advisor and bring your policy and your questions. You will go through them together, with no obligation.