One
of the benefits of a life insurance policy is that it can make life so
much easier for your survivors. If you don’t design your policy
properly, however, you could make it harder on your would-be
beneficiaries to access these funds for bills, funeral expenses and
income replacement because the funds will be locked in probate.
Keeping your policy proceeds from probate is easy if you just follow these tips:
- Name a beneficiary: The easiest way to keep your life insurance death benefit proceeds from probate is to name a beneficiary who is to receive the funds when you pass on. To do this, you simply need to write the name of the individual along with their social security number in the designated spot on your application for coverage. After the policy has been issued, you will be able to change the beneficiary by sending written notification to your insurer. If you want to split your death benefit among multiple primary beneficiaries, list them all along with the percentage of the benefit that you want each to receive.
- Name a contingent beneficiary: If your beneficiary passes before you and you do not choose a secondary distribution method such as per stirpes or per capita to allow the benefit to flow down to secondary family lines, then you need to name a contingent beneficiary (or beneficiaries). That will give the insurance company specific instructions to follow in the event that your primary beneficiary is deceased. As with the primary beneficiary, you can designate multiple contingent beneficiaries to divide the benefit amongst and you can change this designation after the policy has been issued.
- Name a trust: If you’d rather have your death benefit flow to a trust with instructions for management and payout, then you can name a trust as the beneficiary. You can choose a revocable or irrevocable trust. When naming a trust, there is no need to also name a contingent beneficiary as your trust will be there no matter when you pass away. You may not be able to change the beneficiary once you name an irrevocable trust, so discuss this option with your agent before you commit
As you can see, it’s not difficult to ensure that your death benefits
go right to the people you want it to, without delay. If you have
questions about your Plano life insurance policy or how to pick and name a beneficiary, give us a call at (940) 382-4700. We’re happy to help you find the right policy and design it to pay benefits the way you want it to.
