With a life insurance policy, you have the chance to leave significant wealth to your family. Perhaps you purchased the policy when you got married, with the intention of leaving the money to your spouse. Maybe you purchased it when you had your first child, knowing that you wanted to provide for the next generation.
No matter what your goals are, you may find yourself, wondering how to include your life insurance policy in your estate plan. You have other assets to pass on, and you can use the estate plan to do things like making advance medical decisions. So how do you include life insurance?
The policy has a beneficiary designation
In most cases, you don’t need to put your life insurance in your will or in any other part of the estate plan. You do have the option to do so, such as if the policy is going to pay out into your estate when you pass away or if you would like it to pay out into a trust. But you don’t have to list the policy with other assets in your will, and doing so may not even matter.
When you first purchase that policy, you make a beneficiary designation. You tell the life insurance company who they should pay when you pass away. They’re going to follow this designation no matter what your will says.
For example, maybe you bought the policy as a new parent and you just named your firstborn child as the beneficiary. You may have had other children since then, and you want to include them as well. But, no matter what your will says, the life insurance company still only has to pay your firstborn as the named beneficiary. Unless, that is, you change it.
There can be some complex financial questions when making an estate plan. Take the time to carefully look into your legal options and keep things updated.