Term Life Insurance Articles
Where To Include Your Term Life Insurance Policy In Your Will
2010-07-16
As part of estate planning, many people have both a will and a term life insurance policy. Under a will, a pre-named executor or administrator will pay off a deceased person's final bills and other debts and then distribute the remaining estate to the person's designated heirs. Estates that are handled under a will can be subject to income and inheritance taxes. Moreover, a will must be probated, which is essentially a registering of the will with a probate court. The executor will then report to the court after all the proceeds of the estate have been distributed. The court will decide all disputes arising under the will and all claims against the estate that the executor cannot resolve.
A term life insurance policy pays a benefit upon a person's death to either a named beneficiary or the person's estate. If the policy names one or more beneficiaries, the death benefit is paid directly and does not get wrapped up in the deceased person's estate. In most circumstances, the death benefit is not subject to the taxes that might apply under a will. The only time that the benefit under a term life insurance policy will be handled by a person's will is when the policy does not name a beneficiary, or the named beneficiary dies before the policyholder.
There are two ways of writing a will to cover the situation when term life insurance proceeds will be distributed as part of an estate. First, a will can designate a specific person, group of persons or charitable organization to receive the insurance proceeds. This kind of distribution will be made before the residual estate is divided among the named heirs. Second, if no specific beneficiary of the insurance proceeds is named in the will, the sum of money will simply be included in the residual estate to be shared by the heirs.
A will can name one or more heirs to the residual estate. Heirs can share the residual estate equally or be entitled to specific percentages of the estate. When writing a will, a person needs to consider what should happen if an heir dies first. Should the deceased heir's portion of the estate be shared by the other heirs, go to a secondary heir, or pass along to the deceased heir's own heirs?
It is usually advisable to consult an attorney when writing a will. This may be even more important if the proceeds of a term life insurance policy will be included under the will. To get quotes on term life insurance, start by completing the form on this webpage. We can offer our expert guidance on these crucial life decisions.
Free Insurance Quotes
As part of estate planning, many people have both a will and a term life insurance policy. Under a will, a pre-named executor or administrator will pay off a deceased person's final bills and other debts and then distribute the remaining estate to the person's designated heirs. Estates that are handled under a will can be subject to income and inheritance taxes. Moreover, a will must be probated, which is essentially a registering of the will with a probate court. The executor will then report to the court after all the proceeds of the estate have been distributed. The court will decide all disputes arising under the will and all claims against the estate that the executor cannot resolve.
A term life insurance policy pays a benefit upon a person's death to either a named beneficiary or the person's estate. If the policy names one or more beneficiaries, the death benefit is paid directly and does not get wrapped up in the deceased person's estate. In most circumstances, the death benefit is not subject to the taxes that might apply under a will. The only time that the benefit under a term life insurance policy will be handled by a person's will is when the policy does not name a beneficiary, or the named beneficiary dies before the policyholder.
There are two ways of writing a will to cover the situation when term life insurance proceeds will be distributed as part of an estate. First, a will can designate a specific person, group of persons or charitable organization to receive the insurance proceeds. This kind of distribution will be made before the residual estate is divided among the named heirs. Second, if no specific beneficiary of the insurance proceeds is named in the will, the sum of money will simply be included in the residual estate to be shared by the heirs.
A will can name one or more heirs to the residual estate. Heirs can share the residual estate equally or be entitled to specific percentages of the estate. When writing a will, a person needs to consider what should happen if an heir dies first. Should the deceased heir's portion of the estate be shared by the other heirs, go to a secondary heir, or pass along to the deceased heir's own heirs?
It is usually advisable to consult an attorney when writing a will. This may be even more important if the proceeds of a term life insurance policy will be included under the will. To get quotes on term life insurance, start by completing the form on this webpage. We can offer our expert guidance on these crucial life decisions.
