Britons leaving money to wrong people and not checking beneficiaries

A majority (54 per cent) of adults in the UK are unaware that their pension typically goes to the person who is named on their pension policy, rather than their will, putting them at risk of leaving their money to the wrong people, new research has found.

Phoenix Life revealed that 62 per cent of adults in the UK have failed to review the recipients of their life insurance policy, while 60 per cent have not reviewed their critical illness cover, 65 per cent their personal pension, 61 per cent their income protection plan, and 65 per cent have not looked at their redundancy cover policy.

According to the latest figures published by the Office for National Statistics (ONS) in 2018, there were 679,106 births in the UK and 101,669 divorces a year, highlighting the importance for people to update their financial policies regularly.

As well as forgetting to review policies, more than half of Britons (54 per cent) do not realise that their pension could pass on to the person named on their pension policy documents, rather than the person that has been named on their will.

According to Phoenix, this suggests that there is an urgent need for everyone to become more engaged with their finances, “especially their pensions”, which savers have built over a number of years to secure a financially stable future for themselves and their beneficiary.

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.”

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