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Life Insurance

The devil in the details: Consequences of out-of-date beneficiaries


If you’ve ever watched a movie or TV show where the heirs of a family fortune are shocked to discover they are not the recipient of an expected financial payout, you may have already decided you’d like to avoid that drama. To ensure that doesn’t happen to you and your loved ones, you must take some strategic steps ahead of time.

Make a point of routinely reviewing your beneficiaries and updating them if changes are needed to ensure your life insurance payout goes to the person you intend it. Marriage, birth, divorce, or death — these are all life-changing events and are typical reasons you may need to review and change your beneficiary. Pay attention to the details because a life insurance company is also obligated to follow state legislation that could revoke designations based on divorce and this could complicate and delay paying the proceeds to the rightful person. One careless oversight could mean a financial hardship for your survivors because you are no longer able to make the beneficiary change. So, take the time NOW to ensure accuracy!

A beneficiary form is the only reference AAFMAA (American Armed Forces Mutual Aid Association) has for identifying who will receive your death benefit. In many states, it is the legal duty of the payor to pay the person on these forms — even if it’s been years since you reviewed them or signed up for your policy. Evaluating your beneficiary designation ensures that it is accurate through major life shifts, reduces the risk of policy benefits going to the wrong person, and prevents delays in payout.

Every year, AAFMAA sees Member cases where their beneficiary forms still state a former spouse’s name, even though the divorce happened many years ago. The good news is we make it easy to view your beneficiaries on your Annual Statement, which is accessible in the AAFMAA Member Center under the “My Documents” tab, then under “Insurance Documents”. An Annual Statement is published each year for policies issued for at least one year. It lists your current designations for both your primary and contingent beneficiaries in Section 4, along with the date that you last updated it. If you have changed your beneficiaries since the date of publication of your last Annual Statement, you can find the updated beneficiary listed under the “Products & Services” tab, then go to “AAFMAA Policies” and click on the “Details” tab.

Finally, please provide us with the full name and contact information for your beneficiary, along with their Social Security Number and date of birth. That will help us more easily locate them and validate their identity when the time comes.

You can download the Beneficiary Designation Form from the AAFMAA Member Center anytime. Fax, scan or mail the completed form to AAFMAA using the delivery information at the bottom of the form. We will return an acknowledgement of receipt for your personal records and the endorsed Beneficiary Designation form will be available in your Insurance Documents under the “My Documents” tab in the Member Center.

Need our assistance? Contact AAFMAA Policy Services at [email protected], or call 1-800-336-4538 toll free.

This article was originally published January 25, 2016.