How to Update Beneficiary Designations on Your Policies in Ontario

A beneficiary designation is the name you give an insurer or plan administrator to receive the money when you die. Because the money often goes straight to that person, the name on file can matter more than what your will says.

Life changes, such as a new relationship, a birth or a separation, can leave old designations out of date. This article walks through how changes are generally made for each type of asset, and where the rules differ. A lawyer can confirm how they apply to your documents.

First, work out which rules apply

Ontario does not have one single rule for all designations. Life insurance is governed by the Insurance Act, while RRSPs, RRIFs, pensions and similar plans are generally dealt with under the Succession Law Reform Act and, for pensions, the Pension Benefits Act. An insurance-company RRSP or annuity can fall under the Insurance Act instead of the plan rules.

• Life insurance: Insurance Act rules, with a written declaration to add or change a beneficiary.
• RRSPs, RRIFs and similar plans: Succession Law Reform Act, Part III, section 51.
• Ontario-registered pensions: Pension Benefits Act, section 48, which protects the spouse first.
• TFSAs: a designated beneficiary can receive the amount up to the TFSA's value at death without paying tax on it. How this applies to your account depends on your situation, so it is worth confirming with the institution that holds it or with a lawyer.

Changing a life insurance beneficiary

You can name a beneficiary in the contract itself or by a declaration. Unless the designation is irrevocable, you can change or revoke it at any time by a declaration. A declaration is an instrument signed by you that identifies the contract or describes the insurance and designates or changes a beneficiary.

Two exceptions matter. An insurer can, subject to the Authority's rules, restrict or exclude your right to designate beneficiaries in the contract. And if you named someone irrevocably in the contract, or in a declaration filed with the insurer during your lifetime, you cannot change it while that person is living without their consent. An "irrevocable" designation made in a will, or in a declaration that is not filed with the insurer, has the same effect as an ordinary revocable one.

You may also appoint a trustee for a beneficiary in the contract or in a declaration, and change or revoke that appointment by declaration, which is often used for minor beneficiaries.

RRSPs, RRIFs and other plans

A plan participant may designate a person to receive the benefit payable on death. A designation can also be made in a will, but it is effective only if the will relates expressly to a plan, either generally or specifically. If you have both a will designation and a plan form, a later designation revokes an earlier one to the extent they are inconsistent, so the last valid one controls.

This is why an old will and a newer plan form can pull in different directions. The tax side also depends on who you name. For example, a spouse or common-law partner who is the sole beneficiary of an RRSP may avoid having the RRSP included on your final return if the property is transferred to a qualifying plan by December 31 of the year after the year of death. Ask an accountant before choosing.

Pensions are different

For an Ontario-registered pension, if a member dies before the pension starts, the spouse is entitled to the pre-retirement death benefit ahead of any designated beneficiary. A designated beneficiary, and then the estate, takes the commuted value only if no spouse is entitled. A spouse living separate and apart from the member on the date of death has no entitlement.

A spouse can waive the benefit by delivering a written waiver in the approved form to the plan administrator, and can cancel it by signed notice before the member dies. The pension definition of spouse differs from the insurance one, so who counts depends on the statute. Federal plans and plans in other provinces follow different rules.

What to do next

• List every policy, RRSP, RRIF, TFSA and pension you have, and who is named on each.
• Ask each insurer or plan administrator for its current designation form and any restrictions.
• Sign and file the form with the insurer or administrator, and keep a dated copy.
• Ask for written confirmation that the change was recorded.
• Check that your will does not conflict with the newer designation.
• After a separation, divorce or new relationship, file new designations instead of assuming old ones changed. The divorce rules for wills apply to gifts in a will, and whether they affect a policy or plan designation is worth confirming with a lawyer.

If a designation is irrevocable, restricted, or tied to a pension or a separation agreement, get legal advice before you sign anything.

Frequently asked questions