Tens of millions of Americans don’t have wills, in spite of the abundance of online will makers today. Tens of millions of Americans don’t have life insurance. The scary thing is, these groups overlap to a large degree. There are millions of people out there who neither have wills nor life insurance policies, whose families will struggle in the event of their death.
Over the past year and a half, we have become more and more aware of just how suddenly life can be over. More than six hundred thousand Americans have died from COVID-19. Families have been torn apart, facing a prolonged period of mourning and a struggle to get back on their feet.
While life insurance policies and wills are very different things, both provide a way forward for people suffering from the biggest trauma in their lives. They allow families to grieve without having to stress over how they will afford their next meal or who will take care of the person’s estate.
What is the difference between life insurance and a will? Does having a will impact your life insurance policy?
The difference between life insurance and wills
Both life insurance and wills become relevant the moment a person dies. However, they serve very different purposes. A life insurance policy ensures that the family can afford to continue living after their loved one dies. A will gives instructions as to what the deceased person wants for their family.
There is overlap between the two. A will dictates who the individual’s possessions will go to. A life insurance policy dictates who will be the beneficiary of the insurance. These can be entirely different people, but either way, the money or property will go to the people the deceased person has chosen.
With this in mind, life insurance and wills may seem to have nothing to do with each other. You need both, as one does not cover what the other does. However, there are many people who question the need for a will if they have a life insurance policy.
Living hand to mouth
Those who are most reluctant to write a will if they already have a life insurance policy are those who are struggling to stay solvent. They may be the breadwinner of their family, making just enough money to pay for rent, groceries, and other necessities. They may own no assets and have nothing in savings.
The life insurance policy will give their family a cushion to fall back on when they die. But what is the point of a will if they have nothing to distribute? Furthermore, is it really worth spending money on a session with a lawyer to write a will in this case?
What happens without a will?
Although you may not have many possessions to distribute, dying without a will can still cause a lot of strife for your family. It is important to remember that the period of time immediately after a loved one’s death is incredibly stressful. Many close-knit families are torn apart by emotions that have nowhere to go.
The reality is that even the smallest matter of inheritance can cause battles between family members in this environment. Your phone or laptop might be incredibly contentious if it is simply inherited according to intestate laws.
There are also other matters to be dealt with in a will, including funeral plans and the like. Preparing set instructions for after your death can save your loved ones a lot of pain. Instead of them struggling to figure out how to move forward, the practical things are already planned.
Yet that does not change the fact that lawyers are expensive. The good news is that lawyers are not necessary when you are writing a will.
Are online will makers valid?
Because a will is a legal document, people assume that they need a lawyer in order to write one. But the truth is that you can write a will as easily as scribbling some instructions on a napkin in front of a witness. Sign that napkin and whatever you have said is legally binding.
Of course, that downplays the fact that there is legalese used by professionals to root out any possible loopholes and make it very clear what is desired by the individual. This is where online will makers come in.
An online will maker works very simply. It is essentially an algorithm that takes information from you and puts it into a template. This template is carefully designed so as to avoid loopholes. The algorithm is smart enough to ensure that your statements are written as clear instructions.
Online will makers are cheap – there are even free options. Many will makers offer the service of a professional to look over the will to make sure that everything is in order. This is not strictly necessary, but it gives people peace of mind to know that their last will and testament was not only crafted by a computer.
Lawyers are indeed very expensive, which is why online will makers have seen a surge in popularity. They make this basic service accessible to everyone who needs it. There is no longer any reason that wills should be limited to those who have the money to pay a professional.
Wills vs. Life Insurance
Can your will contradict your life insurance policy? The simple answer is no. Your will might state that all your possessions go to a specific person. But your life insurance policy is not considered as an inheritance. In your life insurance policy, you specify who the money will go to, and they get it no matter what your will or intestate succession laws say.
Every breadwinner should have both a will and a life insurance policy. They serve different purposes but are both hugely important. They can save your family a lot of stress and pain in a time that is going to be difficult for them no matter what.
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