Many Canadians assume their will controls everything after death. It does not. Life insurance, RRSPs, RRIFs, TFSAs, and pensions pass through beneficiary designations — not through the will. These are two separate systems, and when they are not coordinated, results can be the opposite of what you intended.

How Life Insurance Beneficiaries Work

When you buy a life insurance policy, you name a beneficiary. This is a contract with the insurance company — not governed by your will. When you die:

  • The insurance company pays the death benefit directly to the named beneficiary
  • Payment is typically made within days or weeks
  • The death benefit is tax-free to the beneficiary
  • The payment does not go through probate
  • The payment is generally not available to estate creditors

What Takes Priority?

The beneficiary designation always takes priority over the will. If your will says "everything to my spouse" but your life insurance names your children, the children receive the insurance. Your will does not control the insurance proceeds.

Common Mistakes

  • Outdated beneficiary: Divorced but never updated — your ex-spouse receives the insurance
  • Conflicting instructions: Will says "divide equally among three children" but insurance names only one
  • Minor beneficiary: Insurance companies cannot pay minors directly — use a trust
  • No contingent beneficiary: If the primary dies before you, proceeds go to the estate — through probate

How to Coordinate

  1. Inventory all designations — life insurance, RRSPs, RRIFs, TFSAs, pensions
  2. Compare with your will — does the overall distribution reflect your wishes?
  3. Update designations through the financial institution, not your will
  4. Review after marriage, divorce, birth, or death of a beneficiary

At Wills Made Easy, a licensed professional reviews your full estate plan — will, beneficiary designations, and asset structure — during a single one-hour appointment. Find your city to get started — $395 for individuals, $495 for couples.