Life insurance provides your beneficiaries with financial assistance. In addition to purchasing adequate life insurance coverage, understand whether you should list the policy in your will.
Probate Versus Nonprobate Assets
When you die, your estate typically goes through probate. Probate is the process through which the executor of your estate files paperwork with the court to prove the validity of your will and ensure your final wishes are carried out.
During probate, outstanding debts are usually paid first, and then remaining assets are distributed to survivors or specific heirs you named, such as real estate, art, or family heirlooms.
Some assets do not go through probate. Life insurance is commonly treated as a nonprobate asset: the beneficiaries listed on the policy receive the death benefit whether the policy is mentioned in the will or not because the policy is a contract between you and the insurer.
For details on using life insurance in estate matters, see Life Insurance (Estate Planning / Estate Conservation).
Why List a Life Insurance Policy in Your Will
Even though a life insurance policy is a nonprobate asset, you may choose to list the policy in your will to make it easier for beneficiaries to locate the policy and notify the insurer when you die.
If you name your estate as the beneficiary, the policy’s death benefit will become part of the probate estate and be distributed according to your will, so it is important to document those instructions clearly.
How to Choose Life Insurance Beneficiaries
You may choose anyone to be your life insurance beneficiary. The beneficiary named on the policy can be the same person you name in your will or someone different.
If you plan to use a policy to fund or create an estate, review Life Insurance for Estate Creation to understand options and implications.
Popular beneficiaries
- Spouse
- Children
- Parents
- Charity or foundation
- Estate
You can change your life insurance beneficiary at any time by contacting your life insurance company and completing the beneficiary designation form. Because the policy is a legal contract, the beneficiary designation on the policy overrides instructions in a will, so keep designations up to date.
If you are unsure which designation best meets your goals, talk to an agent.
Life insurance is a valuable estate-management tool. It can provide for your family or fund a charity after you die. Decide whether to list the policy in your will and review beneficiaries regularly to ensure your final wishes are carried out.
Frequently Asked Questions
Do beneficiaries receive life insurance proceeds if the policy is not mentioned in a will?
Yes. The insurer pays proceeds to the beneficiaries named on the policy according to the policy contract, regardless of whether the policy is listed in a will.
What happens if I name my estate as the beneficiary?
If your estate is the beneficiary, the death benefit becomes part of the probate estate and is distributed according to your will and probate process.
Can I change my life insurance beneficiary after purchasing a policy?
Yes. Contact the insurer and complete the beneficiary designation form; your updated designation controls future payouts.
How can I make sure minors receive life insurance proceeds as intended?
Common options include naming a trust, a custodial account, or a guardian to receive funds on behalf of a minor—discuss available choices with an insurance professional.