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Know Who You Named

February 26th, 2014

A beneficiary designation is an immensely important decision.  Ensuring that your employees have both named a beneficiary and kept it up to date is paramount in showing your employees that you care about what happens to their families should anything happen to them.  Supplying the benefits is primary however employees tend to forget or take advantage of the Life portion of the benefits plan.  Talking to your employees and showing that you care about them personally can help foster an appreciation for these important benefits and you as an employer.

No Beneficiary

 Employees should be aware that if no beneficiary is named, in the event of a claim, the proceeds would be severely delayed and paid to their estate, incurring estate taxes and probate fees, shrinking down this non-taxable benefit significantly.

 Out of Date Beneficiary

 Life changes call for re-assessments of many aspects, a change of beneficiary should be included.  For example, young, single employees who start their career come onto the plan and perhaps name a parent as their beneficiary but a few years into their employment, marry and start a family.  Without updating the beneficiary, the proceeds would be paid to the employee’s parent and would leave his new family reliant on his parent to “share”.

 Naming a Minor

 A trustee should be named for any beneficiary under the age of 18.  The employee should consider having a lawyer draw up a legal trust agreement to ensure that insurance proceeds are used as intended.  The agreement should specify the age of the child(ren) when the trustee no longer has any right to the benefit.

 Contingent Beneficiary

 Naming a contingent beneficiary protects the proceeds should the primary beneficiary die before the insured.  The contingent beneficiary would only receive the funds in this circumstance.

 Summary

 Providing awareness of the potential consequences to your employees can help in building your relationship and ensuring that you’re getting the most out of your employee benefits plan.

 Please contact us for a list of your employees’ beneficiaries to review with them and guarantee that in the event of a death, the funds will be allocated as your employees wish.

Matrix Benefit Services
126 Commercial Avenue, Unit 7
Ajax, ON L1S 2H5
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