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Naming A Beneficiary For Your Life Insurance Policy

You Can Name Your Estate As Beneficiary Of A Life Insurance Policy

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If an estate is named beneficiary of a life insurance policy, the proceeds of the policy will be paid to the estate and then distributed along with the rest of the estate's assets.

If, in fact, you wish the proceeds from the policy to go to a specific individual or individuals, naming your estate as beneficiary is not the best method -- unless for some reason you don't want the people who deal with the insurance to know the identity of your beneficiary(ies).  For example, if you are gay or having an affair, you may not want your employer to know the identity of the person you care enough about to leave a life insurance benefit. 

If the proceeds from a life insurance policy pass through your estate rather than directly from the insurance company to the beneficiary:

  • The proceeds will likely be subject to a commission payable to your Personal Representative/ Executor since that person generally receives compensation based on the assets that pass through the estate. If the money goes directly from the insurance company to the named beneficiary, there is usually no fee to be paid to the Personal Representative/Executor.
  • If debts against your estate are larger than your other assets, creditors may take a portion, or possibly all, of the insurance proceeds.
  • It will take longer for the person to receive the money. Generally, money in an estate is held until all debts are determined, all assets collected and approval is received for distribution of the assets. On the other hand, insurance proceeds payable directly to beneficiaries are usually paid within 30 days of the insurance company's receipt of a death certificate.

NOTE: If you die and no beneficiary is named on the insurance policy, the proceeds will be paid to your estate.


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