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Beneficiary concerns and life insurance policies

On Behalf of | Jul 29, 2022 | Probate & Estate Planning |

Few people wish to think about their mortality, but circumstances might force someone to think about what happens if they die. Specifically, they may worry about their family members. If a primary earner passes away unexpectedly, the survivors could struggle with paying mortgages, medical bills or tuition. Taking out a life insurance policy may help Pennsylvania residents protect their families. Be mindful that you should review your beneficiary designations, because these types of assets pass outside any Will you have have authored.

Beneficiaries and life insurance

A life insurance policy might rank as one of the essential elements of an estate plan. Not everyone has significant wealth, but many people have life insurance policies which provide a way for survivors and beneficiaries to avoid financial pain after a family member’s passing. There are many different flavors of life insurance, such as term or whole life. Some may choose to add on additional coverages for accidental death and dismemberment. And no matter what policy someone purchases, choosing the appropriate beneficiary is important for the overall estate plan.

The beneficiary of a life insurance policy is the person who receives the settlement when the policyholder passes away. The policy might name more than one beneficiary, and the settlement may not be an equal percentage. Depending on the policy’s specific rules, one beneficiary may receive 70%, and the other may receive 30%.

Revising life insurance and estate plans

Estate plans are not necessarily written once and forgotten since the person initiating estate planning could make changes. Life insurance beneficiaries can similarly be changed to meet the needs of an updated estate plan. Not removing an ex-spouse from a life insurance policy or keeping an irresponsible child on the policy could be regrettable mistakes. Reviewing plans, policies, and beneficiaries may avoid unfortunate situations. It may also be worthwhile to engage an experienced estate planning attorney to help you put together a comprehensive plan, so that your Will and your insurances policies work together to achieve your goals.