Claimants and Wills

Most people have a problem understanding that there isn’t a conflict of interest when it comes to the beneficiaries of life insurance policies and the beneficiaries of wills from a deceased person. A well executed life insurance policy that has well defined and balanced list of beneficiaries together with a similarly executed will is a great platform to ensure that your loved ones are well taken care off even after your passing. In this article we will describe how you can make the most of the combination of both to get the best results.

Firstly lets define what an life insurance beneficiary is, he or she is the person that is named in a life insurance policy to receive the benefits of a claim when the policy holder or the insured passes. The life insurance policy will specify either one or a few beneficiaries of the life insurance policy which will be acted upon by the insurance company once the insured of the policy holder expires. It is the responsibility of the beneficiary to obtain all the required documentation and claim the life insurance policy when the insured or the policy holder dies.

Wills are defined as a document where a person regulates the rights of others over their property after the death of the said person. Wills have been in existence almost as early as the development of common law and as such is a huge amount of law and text relating to it which we will not get into. For simplicity’s sake a will is basically the final instruction from a person about how his or her valuables will be dispersed after the death of the individual.

Without a doubt the best thing that you can do for your loved-ones is to ensure that they will continue living a comfortable life even after you have passed on. A combination of a good will and life insurance policy that can cover all the angles is the best bet. The best way to structure your will and life insurance protection is to have wills take care of immediate costs which may be incurred and life insurance used to cover longer term cash flow requirement.

The will should have enough money set aside to cover the immediate costs of hospitalization, funeral ceremonies etc which will require that your family make almost immediate payments. This is because wills are much easier to process than life insurance claims. A well developed will can have your inheritance divided within weeks and is almost always a much easier process than claiming for life insurance as a beneficiary. Having a will set up to cover most cash requirements will place your family and loved-ones in less financial difficulty when the bills mount.

Life insurance on the other hand as mentioned earlier should be used as a longer term aid rather than a short-term injection of money. This is because life insurance claims are inherently very time consuming to process taking on average 1-3 months. The life insurance pay-out should not be in a lump sum but divided into monthly payments much like a trust fund. This can be specified in the policy when you sign-up for it. The benefit for this is that you can be sure that your loved ones will never run out of money and they won’t make large errors in judgment if you give them the whole amount in a lump sum.