There are many reasons to put together an estate. One of the main reasons for those who already have grown children is to ensure that their assets are divided and distributed equally among all the heirs. Adding a life insurance policy to your estate planning can help in a variety of ways.
What to Know First
One huge myth in purchasing a life insurance policy is that the best thing to do is to name your estate as the beneficiary of your life insurance benefit. This is not wise. If you list your estate as the beneficiary, then the proceeds of your life insurance policy will first have to go through probate. The probate process can be a long one – taking months and even years to finish. Courts put estates through probate to ensure that the will left by the deceased is valid. While your estate is in probate your heirs will not be able to access any of the money paid out by your life insurance policy. This could be a problem, especially if the family was counting on using some of those funds to pay for your funeral expenses and immediate debt.
Furthermore, if the proceeds to your life insurance policy are added to your estate, that would only increase the...
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