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Life policy beneficiaries are in the know

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Nationwide Financial Services, Inc. recently surveyed life insurance policyholders and found that the vast majority have informed their beneficiaries of the designation. That’s the good news.

The bad news? Many have neglected some important facts and changes that could impact how quickly the payout is made and to whom.

According to the online poll, conducted by Harris Interactive, of 805 life insurance policy owners across the U.S., 91 percent said their beneficiaries knew of the designation, while 85 percent said they had talked with their beneficiaries about the policy. Seventy percent said they are confident their beneficiaries would know how to file a claim.

However, one in five policy owners related that have yet to forward their beneficiaries’ up-to-date contact information to the insurance company. What’s more, most policyholders-57 percent-who have talked to their beneficiaries about the policy have not told them where the policy is actually located. More than half (55 percent) of policy owners did not change their beneficiary after a divorce.

Leaving out these vital facts could delay payment, warned Peter Golato, senior vice president of individual protection for Nationwide Financial.

“Though most policyholders have done a good job of preparing their beneficiaries, there are some who need to take additional action to ensure their policies are kept updated so that, when the time comes, benefits due are paid in a timely manner,” said Golato in a release summarizing the survey.

Since September has been designated Life Insurance Awareness Month, now is a good time for advisors to examine life insurance policies with clients, Golato noted.

“According to the survey, 75 percent of policy owners have not changed the beneficiaries designated on their policy and among those who did make changes, 77 percent did so five or more years ago,” Golato said. “Policyholders should use Life Insurance Awareness Month as an opportunity to review their policy with their agent or advisor to ensure that their coverage and beneficiaries are up to date.”

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