As this recent article explains, one of the most critical parts of any estate plan is a life insurance policy. Having a life insurance policy increases the size of the estate that a person is able to leave to his or her heirs. The cash from a life insurance policy can also aid your heirs in fulfilling unexpected post-death financial obligations.
If you name an individual as the beneficiary of your life insurance policy, the proceeds will be paid out directly to that individual. This provides quick cash to your beneficiaries to pay the expenses associated with settling your estate. If you name your estate as the beneficiary of your policy, the proceeds will go through the process of probate. In this case, your heirs may have to wait an entire year before they receive the proceeds.
Life insurance policies can be used to balance estates that include a business. Often, business owners choose to leave their business solely to one of their children. This presents the problem of providing the rest of the children with an equally valuable portion of the estate. In this instance, many people take out a sizable life insurance policy and name their other child(ren) as the beneficiary.