April 24th, 2019
Are you leaving your money to the right people after your death?
Recent research has found that, as well as forgetting to review policies, 54% of UK adults don’t realise that their pension pot may pass to the person(s) named as their beneficiary(ies) on their pension plan, rather than who is named in their will. These findings highlight the urgent need for us all to be more proactive with our finances, especially our pensions which we work so hard for years to build up, in order to protect our and our beneficiary’s futures.
Phoenix Life, European life and pensions consolidator, conducted a study of more than 2000 adults in the UK that found that 62% have failed to review the recipients of their life insurance policy, 60% have not reviewed their critical illness cover, 65% their personal pension, 61% their income protection plan and 65% have not looked at their redundancy cover policy since their policies started.
The latest figures published in 2018 by the Office for National Statistics noted that in the UK there were 679,106 births and 101,669 divorces a year, pointing out the importance of people updating their financial policies regularly when there are changes to the lifestyle or family structures.
Phoenix Life customer director David Woollett said: “Few people probably know that pensions don’t form part of the estate on death, which means unlike savings, property and investments, pensions aren’t covered by wills. Therefore, it’s incredibly important that you check all your financial policies regularly to assure your money will go to the people you want, if a claim is made.
People will most likely take out a number of different policies over their lifetimes – whether it’s a pension, life insurance, critical illness – and, as well as ensuring that the beneficiaries are updated as circumstances change, policyholders should inform their recipients about the policy, otherwise they won’t know to make a claim.”
The Phoenix research also highlighted that even though 47% of Britons hold a personal pension policy, these policies are the least reviewed. Furthermore 17% of UK adults have received monies from, or have family that have benefited from, a policy they didn’t even know existed. The study shows that 56% are unaware what policies their father holds, 51% don’t know about their Mother’s and 73% don’t know anything about their sibling’s financial circumstances. This highlights how little us Brits know about the finances of those closest to us and that perhaps we should begin to be more open in order to ensure that our loved one’s don’t miss out.
To conclude, to ensure your money is left to the right people, it is very important to ensure that not only are your policies reviewed regularly but that the beneficiaries noted on your policies are too. Finally, this information should then be aligned with your Will and you should also be more open with your loved ones so they know what policies you have and how you want your estate to be distributed on your death.
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Written by Kay Crooke – Associate Practice Director at Prosser Knowles Associates Limited.