After recently attending a conference on group insurance, we thought it might be a good refresher to reinforce the importance of the beneficiary designations on basic life insurance, accidental death and dismemberment (AD&D), optional life insurance, and optional AD&D.
Benefit administrators have an obligation to maintain the status of each employee’s beneficiary as current as humanly possible. As you are aware, the most common life events that trigger a review are a change in beneficiary are the following:
- Employee death
- Change in marital status
- Change in single / family status
Quite often the beneficiary designation is forgotten about and the life insurance / AD&D benefits are inadvertently paid to the wrong person (ex-spouses/partners).
It is also a common misconception that these funds can be controlled through an employee's will or estate. This is not the case as any product with a beneficiary designation is dealt with outside the estate and in the end the designated beneficiary will receive the money.