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“She Didn’t Update Her Beneficiary Form” – Joan’s Story

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When major life changes occur, forgetting to update insurance and will beneficiaries can have unhappy consequences. Our senior financial planner Heather Holjevac shares this real life story of her client Peggy and daughter Joan, to illustrate the importance of accurately updating your chosen beneficiary.

“When a prestigious law firm in New York recruited Joan for an internship, she seized the opportunity. Unfortunately, she had to leave her boyfriend behind and after a year, the long distance relationship ended. She moved on to meet and marry Jeff, and got pregnant. It was not an easy pregnancy and sadly, when the baby was delivered, the doctors found a large tumour in Joan’s ovary and she was given 3 months to live. To the day, 3 months later Joan passed away.

Since Joan lived in the US while working, it took longer to settle the estate. On a warm summer day, a courier delivered a cheque to my client Peggy. She opened it and in the envelope was a cheque for $75,000 US which was Peggy’s 50% share of Joan’s company life insurance policy benefits. I commented that it was nice that her husband and new son would get the other half.

Peggy looked at me with tears and said no, that the other 50% of Joan’s life insurance went to her ex-boyfriend.

The insurance money that went to the wrong benenificiary

Turns out when Joan was hired, her benefit forms were all filled out naming her ex-boyfriend as beneficiary, the intent was to someday get married. When they broke up and Joan married Jeff, the health benefit forms were updated, but not the life insurance beneficiaries.”

If a Life insurance policy has a named beneficiary, then the proceeds do not go into the estate and therefore are not governed by what is stated in the will. This story should serve as a reminder for all of us to be more diligent in keeping our will current and also the all important beneficiary designations updated, particularly after major life events such as marriage, divorce, death and births.

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