These common life insurance errors can wreck your estate plan:
Naming your estate as beneficiary. This places the policy proceeds in your estate, where the money will be exposed to estate tax and your creditors. Also, your executor will have to deal with more paperwork if your estate is the beneficiary. So you should make sure to name the appropriate people or charities.
Naming only one beneficiary. You should name at least two “backup” beneficiaries, to reduce confusion in the event the primary beneficiary should predecease you.
Putting your life insurance in the “file and forget” drawer. You should check your policies at least once every three years. If the beneficiary is an ex-spouse or someone who has died, you should make the appropriate change and get a confirmation, in writing, from the insurance company.
Carrying inadequate insurance. If you have a young child, it probably will take hundreds of thousands of dollars to pay all his or her expenses, including college bills, in case of your untimely death. Stinting on insurance may penalize your survivors and such economies probably aren’t necessary today, with term insurance costs so low.