Why insurance beneficiaries are important

The importance of insurance beneficiaries

By The Glatfelter Team on February 29, 2024

How your community-focused organization can help protect your most important asset: your people, and how to help them set up their insurance benefits so that they reflect their wishes.

Insurance is designed to help people and organizations through tough situations, including times that are truly devastating. And while a piece of paper can never erase the heartbreak and life-changing implications of a death or serious accident or sickness—it can help give your employees, members and volunteers peace-of-mind to know that, should one of these terrible instances occur, your organization has insurance benefits to help lessen the financial burdens to them and their families.

What types of business insurance policies provide financial benefits for deaths, accidents + illnesses?

There are many types of business insurance policies that offer financial benefits should an employee, member or volunteer lose their life or suffer a life-altering accident or illness while working on your behalf.

For example, emergency service organizations can provide their membership with products like Accident + Sickness (A+S), Group Term Life and Cancer and Critical Illness that are specifically designed to provide benefits for line of duty deaths (LODDs) and the common health and safety risks that firefighters and emergency responders face, like heart attacks, strokes and cancer.

Similarly, employees of nonprofits and other community-focused organizations may have death benefits from Workers’ Compensation coverage. In the event that an employee passes away during the course of their work duties, the employees’ dependents/beneficiaries may be eligible to receive compensation. This compensation varies by state and is a percentage of the weekly wages earned by the deceased individual.

What’s an insurance beneficiary?

Insurance beneficiaries are the people you formally choose to have access to certain financial benefits, assets and products in the event that you’re no longer able to express your wishes. For example, your life insurance beneficiary would receive money directly should you pass away.

How should you pick an insurance beneficiary?

There are no hard rules, but people typically select the person or people who would be the most impacted by the loss. For example, you can designate that, should you die, your spouse would receive your financial benefits so that they could use the funds to help limit the financial burden to your family.

What’s a primary vs. contingent beneficiary?

It’s recommended to select both a primary and contingent insurance beneficiary. A primary beneficiary is the first person who would receive your benefits. However, if your primary beneficiary dies before you or at the same time, your contingent beneficiary will receive your benefits.

How do you assign your insurance beneficiary?

Your insurance agent or provider should be able to give you official paperwork so you can document your beneficiaries. For example, VFIS has a Beneficiary Designation Form which allows emergency responders to complete one card for all of their policies with VFIS.

6 Mistakes to avoid when reviewing + assigning your insurance beneficiaries:

While paperwork and best practices may differ from carrier to carrier, here are a few tips to help you accurately and fully complete your beneficiary forms to help ensure your wishes are fulfilled.

  1. Don’t be brief.
    It’s important to be as detailed as possible when filling out any beneficiary documentation. For example, always list your policyholder information and policy number for each benefit you have so it’s clear which benefits go to which person—and be clear who the primary and contingent beneficiaries are for each one. And, if multiple people are receiving the same benefit, list their names individually (for example, write each child’s name instead of saying “all children”), as well as their Social Security numbers.
  2. Avoid naming minor children.
    In most instances, life insurance benefits cannot be paid directly to a minor. If you’d like a minor to be your beneficiary, it’s important to seek legal advice on the best way to do this or the family may incur a significant cost in hiring an attorney to have the court appoint a guardian/custodian or potentially pay the benefit to an adult member of the minor’s family.
  3. Reconsider naming someone who is on Medicare/Medicaid.
    If someone has housing or resources from Medicare/Medicaid, proceeds of an insurance policy could go to the state rather than to the person you have named or they may lose their government benefits.
  4. Don’t rely on your will.
    Insurance is a stand-alone contract. Therefore, in most instances the names on your beneficiary card will take precedence over names on a personal will. So, let’s say you divorced. If you remove your ex-spouse from your will, the change may only apply to that document. If they’re still listed as your beneficiary, in some states they may still receive the life benefit.
  5. Never have an out-of-date insurance beneficiary form.
    We recommend having your team members review and update their beneficiary information on at least an annual basis, plus whenever a major life event happens—like a marriage, divorce, birth, death, etc. This is vital because beneficiaries cannot be updated after someone has passed—and out-of-date information could make a difficult time even harder.
  6. Don’t be afraid to reach out for assistance.
    If your organization provides your team with these benefits, it’s important for you to make the most of them by taking a few extra minutes to help ensure you’ve filled them out correctly and are following all related regulations. And there’s—understandably—nuances that you may not be aware of. For example, let’s say you’re a firefighter and your fire department means everything to you or you have no surviving family. While you may be tempted to list the department as a beneficiary, it may not be permitted in your state and your benefit would be paid to your estate or possibly to the state.

If you’ve taken steps to better protect your team members and provide them with benefits like these—we commend you on making a true, meaningful difference for them during the moments that matter most. Emergency responders, healthcare providers, teachers, community leaders, water workers and religious leaders are devoted to serving others—and these special people deserve the best protections available.

Looking for something more?

Unfortunately, many insurance policies simply miss the mark when it comes to the full-range of threats they’re up against, including gaps in coverage that are often missed until it’s too late. That’s why Glatfelter and VFIS work hard to provide unique benefits that truly make a difference—and we’re here to be a true partner to our clients and agency partners. Learn more about us here.>>>

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The Glatfelter Team

When this team of rockstars isn't immersed in the process of researching how to reduce the risks your organization faces, we share stories of our pets, kids and favorite pizza toppings—on the daily.


The information contained in this blog post is intended for educational purposes only and is not intended to replace expert advice in connection with the topics presented. Glatfelter specifically disclaims any liability for any act or omission by any person or entity in connection with the preparation, use or implementation of plans, principles, concepts or information contained in this publication.

Glatfelter does not make any representation or warranty, expressed or implied, with respect to the results obtained by the use, adherence or implementation of the material contained in this publication. The implementation of the plans, principles, concepts or materials contained in this publication is not a guarantee that you will achieve a certain desired result. It is strongly recommended that you consult with a professional advisor, architect or other expert prior to the implementation of plans, principles, concepts or materials contained in this publication.

This blog post may contain the content of third parties and links to third party websites. Third party content and websites are owned and operated by an independent party over which Glatfelter has no control. Glatfelter makes no representation, warranty, or guarantee as to the accuracy, completeness, timeliness or reliability of any third party content. References to third party services, processes, products, or other information does not constitute or imply any endorsement, sponsorship or recommendation by Glatfelter, unless expressly stated otherwise.

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