Estate as Beneficiary
Naming the insured's estate, subjecting proceeds to probate delays, administration costs, and creditor claims - generally discouraged in favor of living or trust beneficiaries.
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Practice This Concept
Which is a consequence of naming the insured's estate as the beneficiary of a life insurance policy?
The proceeds become part of the probate estate and are subject to the insured's creditors' claims and probate costs — Naming the estate as beneficiary causes the death proceeds to be paid to the estate, where they become probate assets. The funds are then subject to the claims of the insured's creditors, administration expenses, and the delays and costs of probate. The proceeds also lose the direct-beneficiary creditor protection that a named individual beneficiary would enjoy. Insurance professionals generally recommend naming a specific person or trust instead of the estate so the proceeds avoid probate and are distributed according to the insured's wishes without court administration.
National insurance concept
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