September 2025 Question of the Month

Are Employers Sponsoring Life Insurance Legally Required to Collect Beneficiary Forms from Employees?

Employers are responsible for maintaining accurate and accessible beneficiary designation records for employee benefit plans, a fiduciary duty under ERISA. This includes obtaining, retaining, and ensuring records are updated due to life changes like marriage or divorce, and establishing clear communication with plan recordkeepers to prevent miscommunication or loss of paper forms or digital data. Employers must operate plans for the exclusive benefit of participants and beneficiaries and maintain records for as long as benefits are being sponsored.

Generally speaking when it comes to to group benefits, employers rather than insurance carriers, are responsible for maintaining beneficiary designations. The insurance carriers of group policies typically don't request copies of the beneficiary forms until a death claim is being filed.

Below are some key regulations and best practice considerations:

ERISA Requirements

The Employee Retirement Income Security Act (ERISA) sets the standards for employee benefit plans and requires fiduciaries to manage plans for the exclusive benefit of participants and beneficiaries.

Fiduciary Duty

As a plan fiduciary, the employer has a duty to act prudently and in the best interests of plan participants and beneficiaries.

Documentation

Establish clear recordkeeping systems, such as separate files for plan documents, participant records, and plan year information, to ensure accessibility and compliance.

Collaboration

Work closely with your broker, plan recordkeeper, or third-party administrator to ensure you are fulfilling your responsibilities regarding beneficiary forms. In the era of digital record keeping, an audit following important events like new hire enrollment or annual open enrollment is recommended.

Proactive Approach

Employers should proactively guide employees to update their beneficiaries, preventing potential issues like benefits not reaching intended recipients.

Please feel free to reach out to your Capitol Benefits Group team to review this information as it applies to your company's situation. We are here to help!