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Simple Joys of a Great Life Insurance Policy

 

This truly is one of the great aspects of life insurance that people have enjoyed in the United States for a very long time. There's no question that millions of beneficiaries have not only benefited from the proceeds of a life insurance policy but it has been of tremendous help to them that they did not have to pay any kind of taxes on the amount of money they received from the insurance company. (There are exceptions to this but it's generally true. Check with your insurance agent for specifics.)

What is not nearly as well understood is that insurance proceeds to a beneficiary may get tied up in probate so that instead of someone receiving the proceeds quickly it may be months or even years before anyone benefits from the benefit paid by the insurance company. A policyholder needs to be very careful in how the proceeds of the life insurance are designated in the policy in order to ensure that the insurance company delivers the funds quickly to the person or persons intended by the insured.

We start then with the basics and define Probate as the process of ensuring that any property left through a will or via intestacy laws is free from any creditor claims. Probate is not only making sure of the validity of a will but it always involves notifying potential creditors of the passing of a specific individual with the placing of notices in newspapers and giving them enough time to see the ads and respond in a timely manner, but it is also appraising the value on individual pieces of the insured's property to see how much financial worth is involved in the passing of the insured. This is all part of the probate process.

Normally life insurance proceeds do not get tied up in the complicated, very slow and sometimes very expensive probate process when the insured or policy owner names a specific beneficiary or beneficiaries in the policy. In these cases the life insurance benefit is paid directory to the beneficiary or beneficiaries and is not part a probated estate.

It's important to note that if the insured's estate is named as the beneficiary then the proceeds are handled legally in an entirely different manner with the proceeds going to the estate as a whole as opposed to a specific person or entity. In this case, with the proceeds being part of the estate, the actual disbursement of the insurance proceeds will be delayed and distributed according to probate court. Consequently, if it's the insured's wish that the funds go quickly and directly to a person or organization it's imperative that a specific beneficiary be named in the life insurance policy.

Simple Joys Of Life Insurance

Don't underestimate the value of a good life insurance policy.

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Reference: Simple Joys of a Great Life Insurance Policy

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