The majority of individuals in the UK don’t check the beneficiaries of their financial policies and could be leaving money to the wrong people, Phoenix Life has warned.
Research from the closed book life and pensions provider, which polled more than 2,000 UK adults, found that high numbers of policy holders have failed to review the recipients of their life insurance policy (62 per cent), critical illness cover (60 per cent), personal pension (65 per cent), income protection (61 per cent) and redundancy cover (65 per cent) since they were set up.
According to figures from the Office for National Statistics published last year, there were 679,106 births in the UK and 101,669 divorces a year, demonstrating the importance for people to update their financial policies regularly, as their relationships and lifestyles evolve, and family structures become more complicated, Phoenix Life stated.
The provider’s research also showed that more than half of savers (54 per cent) don’t realise that their pension could pass on to the person named on their pension policy documents, instead of who is named in their will.
David Woollett, customer director at Phoenix Life, 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”.
He said: “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.”
Despite almost half of Britons holding a personal pension policy (47 per cent), the research showed these policies were the least reviewed.
Almost one in five UK adults (17 per cent) has personally benefited, or has family members that have benefited, from a policy they didn’t know existed.
The survey also revealed that 51 per cent of people do not know about the policies that their mother holds, 56 per cent don’t know about their father’s and 73 per cent don’t have information about their siblings’.
With such low engagement there was a danger of missing out on money owed, the provider stated.
Mr Woollett said: “In short, if you want your money to go to the people you want it to, you need to ensure that your financial policies are updated regularly and aligned with your will so that the right person in all your legal documents is named as your beneficiary.
“Being financially engaged is vital to safe guarding your money and talking to those people who are likely to benefit from your financial policies is a starting point.”
Source: FT Adviser – By Maria Espadinha – 26.02.2019
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