What do I need to do to enroll in Group Term Life Insurance?
Check with your benefits administrator.
Why designate a beneficiary?
We need to know who your beneficiary is so that we can pay the proceeds of your Aetna Group Life Insurance to the person(s) entitled to receive them. If you fail to designate a beneficiary or if the designated beneficiary predeceases you, we will pay your group life insurance proceeds according to the beneficiary provision in the group policy.
If I already have a will, why do I need to designate a beneficiary?
Failing to name a beneficiary does not automatically mean that the proceeds will be paid to your estate. How your benefit will be paid in this situation will depend on the terms of the group life insurance policy. However, keep in mind that there may be some disadvantages to having the proceeds payable to your estate. See your legal advisor for implications regarding this important decision.
Moreover, note that your life insurance beneficiaries do not necessarily need to be the same beneficiaries that would benefit under your will. Thus, if you want someone other than the heirs under your will to receive your life insurance proceeds, then you need to make a specific beneficiary designation to achieve this goal.
Whom can I name as a beneficiary?
Your beneficiary can be the person or persons for whom you wish to provide financial protection in the event of your death. Usually, beneficiaries are relatives or very close friends. However, depending on your circumstances, you may prefer to name your estate or a trust as your beneficiary. See your tax advisor for implications regarding these important decisions.
Will my wishes be carried out?
Yes, as long as you've selected one or more beneficiaries for your Life Insurance benefits, your benefit will be paid to the individuals you have indicated, once a proper claim has been made.
Can I name my estate as beneficiary?
Yes. However, there are some advantages to naming a beneficiary other than your estate.
For example, under the laws of most states, if your life insurance proceeds are payable to your estate, the beneficiaries of your estate won't receive the proceeds until a legal process called "probate" is completed. By naming a beneficiary other than your estate, the life insurance can be paid to a designated beneficiary almost immediately after a claim for life insurance benefits has been filed and without having to go through the probate process.
In addition, naming your estate as the beneficiary of your life insurance proceeds may subject them to the claims of your "creditors" (i.e. people and institutions to whom you owe money). This means there may be less money to distribute to your heirs under your will.
Life insurance proceeds payable to a designated beneficiary other than your estate will generally not be subject to the claims of your creditors.
Consult your legal advisor to determine if naming your estate as your life insurance beneficiary is the most appropriate option for you.
Can I name my spouse as beneficiary?
Yes, naming a spouse is a common practice. However, if your spouse is or becomes unable to handle financial matters, or you and your spouse divorce, then you will need to review your beneficiary designation to make sure that it is still appropriate.
Can I name my minor children as beneficiaries?
While you may name your minor children as your designated beneficiary, we will be unable to pay the life insurance proceeds to your children until the earlier of:
- The date that your children reach the age of majority (usually age 18 or 21, depending on applicable state law).
- The date that a legal guardian of the minors' estate has been appointed by a court. This appointment process can be costly, and state laws may limit who may be named a guardian of an estate. Generally, a guardian of the minors' estate will hold the money for their' benefit until they reach the age of majority, usually age 18 or 21, depending on state law.
One alternative to naming your minor children as your beneficiaries is to establish a Trust that can receive and manage the proceeds on behalf of your children. In this situation, you would designate the Trust as the beneficiary of your proceeds.
If you want your minor children to receive your life insurance proceeds, you should consult your legal advisor to determine the best way to accomplish this under the laws of your State.
Can I name a trust* as beneficiary?
Yes, you may name a trust as the beneficiary of your life insurance proceeds. However, if you name a trust as beneficiary, a valid, legal trust must exist at the time of your death. If the trust was never established, is not in existence, or has been revoked by the time you die, then we cannot honor that beneficiary designation and will be required to pay the proceeds in accordance with the terms of the group policy under which you are covered. You should consult your legal advisor as to how to establish a valid trust and determine if naming a trust as beneficiary is an appropriate choice for your financial and estate planning needs.
How does community property affect my decision?
If you live in a community property state - (Arizona, California, Idaho, Nevada, New Mexico, Texas, Washington or Wisconsin) your spouse may have a legal claim for a portion of the life insurance benefit under state law. If you name someone other than your spouse as beneficiary, payment of the life insurance benefit may be delayed until your spouse's claim is resolved. If you make the beneficiary someone other than your spouse, it may be a good idea to get a signed statement from your spouse waiving his or her rights to any community property interest in the benefit.
*Defining Trust - A trust is a written document under which money or other assets are transferred from one person (the "grantor") to another person or institution such as a bank (the "trustee"), to be managed and used for the benefit of a third person (the "beneficiary"). Trusts can be designed to accomplish a wide range of financial and estate planning goals. There are two basic types of trusts: the "living trust" and the "testamentary trust". Living trusts, also known as "inter vivos" trusts, are created during the lifetime of the grantor. Life insurance proceeds which are distributed to a living trust will avoid probate. Testamentary trusts are drafted as part of a will and take effect after the death of the grantor. Proceeds distributed through a testamentary trust pass through the "probate" process after the grantor's death because the trust is included in the will.