- Taken from “Today’s Wills and Probate” by M Parrin
Over half of the population could be naively handing their inheritance to the wrong person.
54% of the population are unaware that their pension policy will be passed down to the person named on the policy, even if an updated will says otherwise.
The study of more than 2,000 UK adults, completed by the Pheonix Group, found that 65% of adults had failed to review the people attached to their personal pension policy. This means that far many people who may have a very different life in the time between the policy’s creation and the present, their hard earned contributions could benefit people that are no longer in their lives.
Additionally, 62% had not updated their insurance policies, 60% had overlooked their critical illness cover, with income protection (61%) and redundancy cover (65%) also forgotten, even if they had been mentioned in a valid UK will.
The research indicates that personal pensions remain some of the most reviewed documents, with less than 25% of policy holders taking the time to ensure the correct person has been named on the policy. When you consider that 47% of the population hold these policies, the impact on the families concerned could be severe.
As more families blend in the modern world, it could mean that a first marriage spouse could benefit from a policy made years before a divorce, even if the current spouse is named in the will. Overall, 17% of the UK has benefitted from policies that were unknown to themselves.
The report also highlights the poor communication within families in relation to policies that have been made. 73% of respondents are oblivious to a policy that a sibling may have, 56% naïve to their father’s various policies and over half (51%) in the dark about the policies involving their mother.
David Woollett, Customer Director, Phoenix Life comments: “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.
“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.”