Where there’s a will: Britons could still be leaving money to the wrong people.
- Half of UK adults (54%) don’t know that their pension typically goes to the person who is named in their pension policy, not their will
- 3 in 5 life insurance holders (62%) in Britain have not checked the beneficiaries of their policy since setting up
- 1 in 5 people (17%) has benefited financially from a policy they didn’t know existed.
Phoenix Group, Europe’s largest life and pensions consolidator, reveals that most Britons do not check the beneficiaries of their financial policies and could be leaving money to the wrong people.
In a study of more than 2,000 UK adults Phoenix found that high numbers of policy holders have failed to review the recipients of their
- life insurance policy (62%).
- Critical illness cover (60%).
- Personal pension (65%).
- Income protection (61%)
- edundancy cover (65%) since they were set up.
Latest ONS figures released in 2018 show there were 679,106 births in the UK and 101,6693 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.
As well as forgetting to review policies, more than half of Britons (54%) 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.
This suggests that there is an urgent need for everyone to become more engaged with their finances, especially their pensions which they’ve worked for years to build in order to protect their and their beneficiary’s financial future.
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.”
Personal pensions rarely reviewed
Despite almost half of Britons holding a personal pension policy (47%), the Phoenix research has shown these policies are the least reviewed.
This is especially true in the South West of England, where under 1 in 4 policyholders has reviewed their pension plan.
- North East 33%
- North West 37%
- Yorkshire and Humberside 39%.
- East Midlands 31%
- West Midlands 43%.
- East of England 30%
- London 41%
- South East 31%
- South West 24%
- Scotland 43%
- Source: Opinium Research; 22nd – 24th January 2019
Family fortunes
Almost 1 in 5 UK adults (17%) has personally benefitted or has family that have benefitted, from a policy they didn’t know existed. While these unknown policies may be a generous gift from family or friends, the fact they can be a surprise highlights how little we know about the finances of those closest to us.
As the research shows, a staggering 51% of people do not know about the policies that their mother holds, 56% don’t know about their father’s and 73% don’t have information about their siblings’.
With such low engagement, there is a real danger of missing out on money owed to you. Woollett adds: “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.”
Stephen Pett of The Probate Department added: “Everyone should review their Legal Planning – Wills, Trusts, Powers of Attorney etc every 3 years or when a significant change is about to take place. Domestic situations change, people get old, younger people grow up and have children and HMRC find new and ingenious ways of raising tax. Reviewing and detailing both Legal and Financial Planning is essential, and should be a regular job. Our offering is the Peace of Mind Service.” The only service we provide directly is the Peace of Mind Service, but we know lots of good advisers after over 40 years!
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