Before you get confused, we are here to tell you that both life insurance and Will are essential factors for an estate plan. They are your resource to plan for the future and to back your loved ones in times of need after you pass away.
Based on this matter, we’ll talk about the importance of life insurance and your Will in an estate plan, the difference between the two and their benefits. Keep reading till you get your answers!
But first, what is life insurance?
Life insurance is an insurance type that provides a monetary amount to your family upon your death. If your death occurs while the insurance is active, the company provides the beneficiary with a lump sum amount of money called the death benefit. You can have more than one person as the beneficiary in your life insurance.
Life insurance aims to support your loved ones after your death, be it for funeral expenses, mortgage payments, education, bills, etc. They ensure your family’s financial security, especially if your death occurs unnaturally.
What’s the difference between life insurance and Will?
To answer your question, both of these complement each other. Wills works alongside life insurance to secure your loved ones’ future after you die.
While life insurance provides the monetary death benefit to the beneficiary, your Will lets you distribute your assets among the beneficiaries. In fact, you can include your life insurance in your estate plan. We’ll talk about it towards the end of this blog.
Beneficiary – Life insurance and Will
Although we’re pretty sure you’re aware of the term “beneficiary,” it is essential to know that not all beneficiaries are the same. For instance, the beneficiary of life insurance is quite different from the beneficiary of a Will.
When the life insurance policyholder passes away, the life insurance beneficiary receives a death benefit amount from the policy. There will be no change in the procedure and the beneficiary or beneficiaries will receive the money as they’re supposed to.
On the contrary, the beneficiary of a Will refers to the person who’s entitled to the assets listed in the Will. A Will can include one or more beneficiaries to different assets with the amount and type of possession defined in it.
How can you include life insurance in your Estate to your benefit?
Sure, you can leave your assets and money to your loved ones to look after themselves after you. However, if you had any debt at the time of your debt, creditors may claim your estate at the probate court. This is where having life insurance included in your Will plays a significant role in protecting your loved ones.
Your creditors would no longer need to claim your estate as the death benefit from the life insurance policy will protect your family and help pay off your debts.
Conclusion: Should you have both a life insurance policy and a Will?
Both life insurance and a Will are essential for end-of-life preparation in the most secure way possible. They work together to secure your family’s finances after you pass away and pay off your debts and bills.
So, to answer the question, it’s best to have both a life insurance policy and a Will. Both documents complement each other in the best way that suits the interests of your loved ones, and you can rest peacefully in your grave as your family gathers the strength to lead a stable life with your plans.