You can’t take your money with you at the end of your life. So, you might expect more Canadians would name a beneficiary. However, it’s surprising how many of us haven’t done that, says Sun Life advisor Brent McKay.* Or, how many Canadians haven’t updated their beneficiaries after a life change like divorce or a growing family.

Don’t worry. Naming a beneficiary only takes a few minutes, costs nothing, and doesn’t require help from a lawyer. An advisor can help guide you on choosing beneficiaries, or if a trust may be more appropriate

What is a beneficiary?

A beneficiary is a person who is entitled to a certain benefit.  

For example, a named beneficiary on a life insurance policy receives the death benefit. 

What does naming a beneficiary mean?

Naming a beneficiary is when you choose (and officially “name”) who will receive the proceeds of your   

  • registered investment accounts,  
  • insured wealth products, insurance policies, or  
  • other benefits when you die.  

Naming beneficiaries is important. Especially for people with families. It helps ensure loved ones receive what’s intended for them.

Who can you name as beneficiary?

You can name anyone you wish as your beneficiary, People often name their spouse or children as their beneficiaries. Naming a beneficiary, or naming a trust can provide greater privacy, since the funds bypass probate (which is public). 

Are you ready to rush off right now and name your own beneficiaries? Hang on a minute! You may not need a lawyer to do it. But this is one of those times when advice from an advisor can help.

What is a contingent beneficiary?

A contingent beneficiary is someone who receives benefits if the primary beneficiary has died at or before the time the benefit needs to be paid. 

Ask your advisor about naming a contingent beneficiary.

Can you name a business as a beneficiary?

A business can get what’s called key person insurance. This is an insurance policy that a company purchases on the life of someone (i.e. an owner, partner or employee) who is vital to a business. This person may be vital to the success and operation of the business because they provide money to support its operation, special skills, or both.

The coverage can include life insurance, critical illness insurance, and/or disability insurance. The company is the beneficiary** of the policy and pays the premiums.**

What are the benefits to naming a beneficiary?

There are three good reasons to name a beneficiary:

  1. More money for the beneficiary. Appointing a beneficiary (like your spouse or children) means the proceeds go directly to them rather than through your estate. If it goes through your estate, your family could receive less money.
  2. It’s private. Unlike a will — which becomes public when it goes to probate** — naming a beneficiary, or having a trust set up, means that only the person named needs to know the specifics. “If it’s a beneficiary appointment, only your beneficiary knows that,” McKay says. The extra privacy can help:
    • prevent jealousy and tension among those named (or not named) in a will and
    • reduce bad feelings over “getting my fair share,” or
    • leave proceeds behind to someone who is not necessarily in your will.
  3. You can make life easier for your spouse. If you name your spouse as your account beneficiary, the money can pass directly, tax-free, from your RRSP to your spouse’s RRSP. This is called spousal rollover and it’s automatic unless you opt out.

    What if your spouse’s account has no contribution room? Your money still gets rolled into that account, without penalty, McKay says. Your financial institution can handle the paperwork, with:

    • no need for a lawyer and
    • no delay or probate** fees while your will is sorted out. (Probate fees vary by province. And can cost hundreds or thousands of dollars, depending on the size of your account).

    with a TFSA, it may be better to name your spouse as the successor holder, rather than the beneficiary.1 If they are the successor holder, they take over as the new owner from the instant of death. There's no interruption in the TFSA's growth. If the spouse is the beneficiary, they:

    • get the money from the TFSA with no tax consequences,2 and
    • can put that money into their own TFSA without needing any additional contributing room.

    There may be an interruption between the date of death and reinvestment. During that time, growth could have occurred in the deceased's spouse's TFSA, and would be subject to tax.

    The asset is either transferred to a successor holder, paid to a beneficiary, or directed to the estate. A spouse may elect an exempt contribution rollover by filing with CRA. Note that there’s a time limit to move the TFSA money from the deceased's TFSA (Dec 31 of the year following death) without the surviving spouse beneficiary needing additional TFSA contributing room.

Though you still won’t get to take your money with you, naming beneficiaries helps ensure your money will go where you want it to go. 

Note: Successor holder is not available in Quebec.

There is no tax on proceeds from a TFSA (the market value on date of death). 

What happens if you don’t name a beneficiary? 

If there is no primary beneficiary, your life insurance death benefit** will go to the estate.  

Once in your estate, your death benefit may be used to pay your debt – and may also be subject to probate fees. Assets left over after paying debt and taxes are distributed in accordance with your will.  

However, if a primary beneficiary and contingent beneficiary are named, and the primary beneficiary is no longer available, then it goes to the contingent beneficiary. 

Who can you name as a beneficiary if you’re single? 

If you don’t have a spouse or children, it’s still important to name a beneficiary. You could choose a close relative, a dear friend, or a charity that’s important to you. For example, you could set up a scholarship with the proceeds of your life insurance policy.  

Can you name a minor child as beneficiary?

You can name a minor, dependent child as a beneficiary. But in some provinces, the child will not have access or control over the money until they reach the age of majority. Rather than naming the minor as your account’s beneficiary, you might want to create a “trust.” A trust is a legal entity that defines how and when a beneficiary, who is a minor can receive the money, and how to manage the money until that time. 

At age 18, a beneficiary may have full access to all the assets and remove the trustee, unless otherwise outlined in a will.

You’ll need professional advice to sort out what will work best for you. Start by talking with your advisor. They may suggest bringing in your lawyer to help put the right solution in place.

Can your investment accounts have beneficiaries? 

Beneficiaries are for more than just life insurance. You can name a beneficiary for your: 

  • Registered retirement savings plan (RRSP), 
  • Locked-in retirement account (LIRA or LRSP), and 
  • Insurance company-issued investment such as a segregated fund or annuity

As mentioned earlier, it might make more sense to use the successor holder option for a Tax-free-savings account (TFSA). Doing so means the successor holder takes over as the new owner from the instant of death. 

Do you need to change your beneficiary for a Sun Life policy? 
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Do you need to name the same beneficiary for everything? 

You can choose the same or different beneficiaries for each account or policy. 

For example, you can name one adult child as beneficiary for your RRSP account.3 And you can use your will to name your adult daughter as the heir to your other investments.  

Whatever you choose, it’s a good idea to get advice. That way, you can avoid creating confusion, bad feelings, or legal costs for your beneficiaries. Talk to your advisor about your options. If needed, they’ll recommend you speak with a tax or legal advisor. 

Note: only a spouse or common-law partner can be named as a successor holder for a TFSA. 

How often do you need to review your beneficiaries?  

It’s a good idea to review your beneficiary designations: 

  • annually, because you may have changed your mind since naming your beneficiaries, and/or  
  • after a major life event, such as marriage, divorce, birth or adoption of a child, or the death of someone you’ve named as beneficiary. 
    • For example, people with blended families need to revisit their beneficiaries to ensure their wishes are met for their children and new spouse.  

Do you need some help with your life insurance or investments? 

Find out how life insurance can protect the people you love. And how to build your savings for now – and later. Talk to an advisor. Building a customized plan with a Sun Life advisor can help you maximize your estate and leave a legacy for your loved ones.  

Or you can apply for life insurance online with Sun Life GO insurance. Get a free life insurance quote

* Brent McKay, CFP®. McKay Insurance & Financial Services Inc., Sun Life Financial advisor. Mutual funds offered by Sun Life Financial Investment Services (Canada) Inc. Sun Life Assurance Company of Canada is a member of the Sun Life group of companies.


** Definition of terms:

Beneficiary: Insurance companies call the person (or persons) named on the insurance policy to get the death benefit the beneficiary. People often name their spouse or children as their beneficiaries.

Premiums: the annual fees you pay for having insurance.

Death benefit: Insurance companies call the money they pay when an insured person dies a death benefit.

Probate: The approval process that confirms the validity of your will and the appointment of your executor. Probate does not apply in Quebec.


This article is meant to provide general information only. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.