How Should I Explain a Change in Beneficiary to my Family?

Making a change to the beneficiary of your life insurance policy is a relatively easy task to complete. You simply contact your insurer and they will provide you with the necessary paperwork to fill out in order to change the name of the beneficiary to your policy. This is normally a step that can be completed without any additional cost to you, unless you were to need to employ the assistance of an attorney, just as some hire lawyers to make their will.

For complex estates you may wish to consult with the family attorney before making a new beneficiary designation. In this instance, your attorney may need to bill you for his or her time but the insurance company itself may not require any additional fee be paid to them in order to make the change. However you go through the process of designating a different life insurance beneficiary, the process itself is usually relatively simple.

It is when personal issues arise that a change to a beneficiary can become somewhat complex and require an explanation to family members who may react to this change in a sensitive manner. Often, a death or divorce precedes a need to change a beneficiary. If this is the reason you are about to make a change to your life insurance policy, then there probably is not much you need to worry about in the way of needing to explain to your family why the change had to be made.

Handling a Sensitive Matter

For the most part, changing a beneficiary to a life insurance policy after a death or divorce, or even an adoption, is something other family members may clearly understand. But, there may be times where a sibling or child feels slighted to have been overlooked as the new beneficiary. This is an instance where an explanation for the change may become necessary.

For instance, if after the death of a parent the new beneficiary is the eldest child, you may have based the decision to make the eldest child the beneficiary purely upon logic. As with many wills, the oldest child is often selected by default as the executor or executrix simply because they are the oldest child. The same may apply for you with a life insurance policy.

The choice to select the first born child as the designated new beneficiary may upset any of your other children. Perhaps they feel more entitled or responsible to handling the filing of a claim and settling your final expenses with the life insurance benefits than their sibling. When feelings get involved it can make explaining the change a delicate matter. Yet, since things like this can result in misunderstandings it is vital to explain the reason for the change.

Be as straightforward as possible. Using the example above, you would explain that since your mother or father passed away, the next logical choice for your policy was the oldest child. You would explain to the children that there was no personal reason for making the change, it was simply necessary in order to legally designate someone to be listed on the policy as the beneficiary.

This should help clear things up before they become issues among your children or other family members. Reassure them that the life insurance benefits are going to fulfill several financial needs at the time the claim is made. You can let them know that they would each be able to help take care of the various financial issues that arise after your death with the benefits, however, only one child or other family member could be designated as the policy's new beneficiary.

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