What do you mean I need a beneficiary?
First things first, most of us have heard the term beneficiary thrown around but, how many of us actually know what it is? Generally, a beneficiary is a term used to describe someone who is the recipient of something. It could be money or property or almost anything else really.
So why is it so important to name one? Or, how do you become one? Well, to become one, someone has to decide they want you to be their beneficiary. You could be named as a beneficiary on a retirement account, a life insurance policy or a will. The beneficiary doesn’t always have to be a person, it could be a charity.
Good to knows about beneficiaries and life insurance policies
If a beneficiary is not named, your estate becomes the beneficiary. Meaning your family would have to go through the legal system to have any money or property distributed among them.
- There are two types of beneficiaries you can name. Revocable and irrevocable.
- Revocable means that you can change who your beneficiary is anytime without getting their consent.
- Irrevocable, on the other hand, means that if you want to change your beneficiary you actually need their consent to do so. In Quebec, if you name your legal spouse as your beneficiary, they are automatically irrevocable unless you specify otherwise or divorce.
Naming a beneficiary is so important because it can help take some of the stress away from your loved ones in the event of your death. You decide how you want your money distributed and your loved ones can focus on what’s important during such a challenging time.