When you buy a life insurance policy, you may still be relatively young. Perhaps you just had your first child, so you realized it was important to provide them with some sort of financial security. As a result, you named your spouse and your child as the beneficiaries on the life insurance policy.
Now you’ve grown a bit older and you’re doing your estate planning. You still have that life insurance plan. How do you need to address it in your estate plan?
Who matters in an estate plan?
The truth is that you may not have to address life insurance at all, because the life insurance plan pays out to the beneficiaries. In this example, that is your spouse and your child. You do not have to put the same instructions in your will, as that will already happen.
In a situation where there’s a conflict between the will and the beneficiary designation, the beneficiary takes precedence. The life insurance company is not going to be worried about what your will says if they’ve been directed to pay a specific person. They are going to follow those directions and cut the check.
Of course, you can add life insurance to your estate plan if you want to, in a few different ways. One example would be setting up a trust and then using the trust as the beneficiary. This allows you to distribute the money through the trust after you’ve passed away.
Do you know what options you have?
Estate planning is very important, regardless of your age, especially when you have significant assets. You may want to make sure you are well aware of all of the options at your disposal.