One of the primary advantages of life insurance is that death benefits typically bypass probate. However, this outcome depends on how beneficiaries are named. Understanding when life insurance avoids probate—and when it does not—helps ensure proceeds are paid quickly and according to the policy owner’s intentions. What Probate Is Probate is the legal process used … Read more
Life insurance is often valued for its favorable tax treatment, especially for beneficiaries. Understanding how death benefits, interest, and special situations are taxed helps beneficiaries avoid surprises and plan appropriately after receiving proceeds. Income Tax Treatment of Death Benefits In most cases, life insurance death benefits are income tax-free to beneficiaries. This applies when: The … Read more
When a life insurance claim is approved, beneficiaries must choose how they want to receive the death benefit. Payout options affect how quickly funds are received, how long they last, and how they are managed. Understanding these options helps beneficiaries make informed decisions during an already difficult time. The Claims Process Before Payout Before any … Read more
Life insurance beneficiaries may be designated as revocable or irrevocable, and the distinction affects who controls the policy and how easily beneficiary changes can be made. Understanding this difference is critical to avoiding unintended restrictions and ensuring beneficiary designations align with long-term planning goals. What a Revocable Beneficiary Is A revocable beneficiary is a beneficiary … Read more
When naming life insurance beneficiaries, policy owners must decide how death benefits are distributed if a beneficiary dies before the insured. Two common designation methods are percentage (per capita) and per stirpes. Understanding the difference helps ensure benefits pass according to long-term intentions, especially when children or multiple generations are involved. What Percentage (Per Capita) … Read more
Life insurance policies allow policy owners to name more than one beneficiary. Naming multiple beneficiaries can help distribute death benefits according to specific intentions, provide financial support to multiple parties, and reduce the risk of disputes—provided the designations are clear and properly structured. Why Name Multiple Beneficiaries Policy owners may choose multiple beneficiaries to: Multiple … Read more
Blended families often involve spouses, children from prior relationships, and shared dependents. Because of these overlapping responsibilities, life insurance beneficiary planning is especially important to ensure proceeds are distributed fairly, clearly, and according to long-term intentions. Why Beneficiary Planning Is More Complex in Blended Families Blended families may include: Without clear beneficiary designations, life insurance … Read more
Divorce is one of the most common reasons life insurance beneficiary designations need to be reviewed and updated. Failing to make changes after divorce can result in death benefits being paid to unintended recipients, regardless of current wishes or updated estate documents. Why Divorce Requires Immediate Review Life insurance beneficiary designations are controlled by the … Read more
Spouses are the most commonly named life insurance beneficiaries. Properly structuring spousal beneficiary designations ensures death benefits provide timely income replacement, debt relief, and long-term financial stability for the surviving spouse. Why Spouses Are Commonly Named as Beneficiaries Spouses often rely on shared income and assets to support: Life insurance helps preserve financial continuity after … Read more
Naming minor children as life insurance beneficiaries requires special planning. Minors generally cannot receive life insurance proceeds directly, and improper beneficiary designations can lead to delays, court involvement, and loss of control over how funds are used. Why Minors Cannot Receive Proceeds Directly In most states, minors lack legal capacity to manage inherited assets. If … Read more