Understanding Beneficiaries
Naming a beneficiary ensures that if you were to pass away, your life and pension benefits will be paid according to your wishes. It’s important to review and update your beneficiary designations regularly, especially after major life changes like marriage, divorce, or the birth of a child.
What is a Beneficiary?
A beneficiary is a person (or several people) or an entity (for example, a charity) who you want your life insurance and/or pension benefits to be paid to upon your death. It’s important to keep this information current so those you care about receive these benefits, reflecting your wishes.
Naming a beneficiary allows your life insurance to be paid directly to them, tax-free, without delays associated with estate settlement. If you don’t assign a beneficiary, benefits will be paid to your estate, potentially incurring probate fees and delays.
Types of Beneficiaries
Primary Beneficiaries
Your primary beneficiary is the first person (or people) who will receive the coverage payout if you pass away. For example, if you name your spouse as the primary beneficiary, they will receive the benefits directly, ensuring financial support during a difficult time.
Contingent Beneficiaries
A contingent beneficiary serves as your backup plan. They receive the benefits if your primary beneficiary is unable to, such as in cases where the primary beneficiary has also passed away. For instance, if your spouse is your primary beneficiary, you might choose your child or a trusted relative as the contingent beneficiary.
When to Update Your Beneficiaries
Review your beneficiaries regularly (at least annually), and whenever you experience a major life change such as marriage, divorce, or the birth of a child.
Additionally, you will need to update your beneficiary information if one of your beneficiaries is incapacitated or passes away.
Loss of Beneficiary’s Legal Capacity
If your spouse or beneficiary loses legal capacity due to an injury or illness and can no longer make decisions, you can complete a new Welfare Enrollment/Change Form and Pension Plan Enrollment/Change Form to appoint a Trustee. This Trustee will manage life insurance and pension death benefits, or if applicable, the survivors pension, on the beneficiary’s behalf in the event of your passing.
Death of a Beneficiary
If your beneficiary predeceases you, you’ll need to submit a new Welfare Enrollment/Change Form to appoint a new beneficiary for your Health & Welfare benefits. This helps ensure your life insurance benefits are not paid to your estate upon your death, which may incur probate fees, estate taxes, and creditor claims, and takes longer to get into the hands of your preferred recipients.
If you have named contingent beneficiaries on your form, your life insurance will be paid to them in the event your primary beneficiary passes away. For more details, please refer to the Benefits Booklet.
You will also need to update deceased beneficiaries on your Pension Plan. Contact UA Local 67 Benefits for the proper steps and documents.
Looking for More Assistance?
Contact the UA Local 67 Benefits team, we’d be happy to help.