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Life insurance beneficiary mistakes that cost families money

Naming a minor, forgetting an ex-spouse, listing the estate: the errors we see most, and how to fix each one in an afternoon.

Updated September 5, 2026 · 3 min read · by Gerino Alejos

Your beneficiary is who the company pays when you die. You name them on one line of a form, and that line overrides your will. The mistakes we see most are naming a young child, leaving an ex-spouse on an old policy, naming your estate, and never naming a backup. All four are fixable with a form that costs nothing.

Naming a minor child directly

An insurer cannot hand a large check to a nine year old. The money goes to a court supervised arrangement. A guardian has to be appointed, and the child receives whatever is left at 18, all at once.

The fix is to name a trustee, an adult you trust to hold the money for the child. You can also set up a simple trust or a custodial arrangement and name that. It is not expensive, and it takes one conversation with an attorney.

Leaving an ex-spouse on the policy

This is the error we find most often. Divorce does not automatically remove a named beneficiary on a life insurance policy in every situation. Policies bought years ago often still name someone the family no longer expects. Check every policy after a divorce, including the one at work.

Naming your estate

Naming the estate as beneficiary sends the money through probate, the court process that sorts out what a person leaves behind. That means delay and cost, and it lets creditors, the people you owed money to, reach the money. Life insurance paid to a named person usually avoids all of that. Name people, not the estate, unless an attorney has told you otherwise for a specific reason.

No contingent beneficiary

A contingent beneficiary is your backup, the person paid if the first one cannot be. If the first person named dies before you and no backup is listed, the money usually goes to your estate, and back into probate. Always name a backup.

Percentages that do not add up, and stale forms

• Splitting among children in percentages that total 90 or 110, which stalls the claim.
• Naming a child who has since had children of their own, without deciding whether that share should pass to the grandchildren.
• Listing a name only, with no date of birth or address, which makes the person hard to locate.
• Never updating after a marriage, a birth or a death.

Fixing it costs nothing

A change of beneficiary form takes ten minutes and costs nothing. Do it for every policy you own, including group life at work. Group life is the coverage your job provides. It is administered separately, and it is almost always the one people forget.

Bring your policies in

Bring your policies with you, and we will read the beneficiary line on each one and tell you which need changing. Call our McAllen office at (956) 687 3334, or enter your ZIP code in the box on this page. Se habla español.

Rather talk? (956) 687 3334

How much should it pay?

The death benefit is what your family receives. Most final expense policies here run between $5,000 and $25,000.

Coverage amount

$10,000$15,000$20,000$25,000Not sure

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Licensed Texas insurance agency Local office in McAllen We don’t sell your information

Gerino Alejos

Licensed insurance agent · License 3128710 · NPN 18243381

Owner of McAllen Insurance Group, an independent agency on North 10th Street in McAllen. Works with clients across Hidalgo, Cameron and Starr counties on Medicare, Marketplace health, life and auto coverage. Se habla español.