Life insurance policies can be worth a substantial sum of money, often the details of which are not known until someone dies. So, what implications do life insurance policies have regarding probate? Read on to find out.
Is Life Insurance Part of an Estate?
Generally, life insurance pay-outs are not part of an estate, meaning there is no need for a Grant of Probate to claim it. The pay-out is usually paid directly to the beneficiaries named in the insurance policy and therefore do not get involved in the estate. However, it can depend on how the policy is written.
If a homeowner has an insurance policy to cover their mortgage value, although the policy is not part of their estate, they are relevant as it will determine how much debt the estate has. The policy may clear the outstanding mortgage debt, meaning a larger estate will be distributed between beneficiaries. This may then increase the inheritance tax due.
What if the Life Insurance Beneficiary Has Died?
Sometimes a life insurance policy is due to be paid out to someone who is also deceased. In this case, there may be a beneficiary appointed in their will. However, if there isn’t, the insurance company may wish to investigate to decide to whom the money should be paid. This may mean it is added to the deceased’s estate, but that is not always true.
Finding Out if Someone has Life Insurance
Sometimes you may not know if a loved one has existing insurance policies. The first thing to do is to look at their paperwork in search of policy details. If you cannot find anything, try looking at their bank statements. If they have a policy, there will be a monthly payment. From there, you can contact the company directly to find out how to access the details. They are usually happy to deal with the person executing or administering an estate with the correct information and documents.
Another thing to try could be their employer. Many companies offer a death-in-service policy, so if they were employed at the time of their death, this is an avenue worth pursuing. Another option is to use an unclaimed asset service.
As with may aspects of probate, there is not one clear cut answer. When it comes to life insurance and probate, each case may vary. It is always best to seek advice from a professional.
Contact UK Probate Reseals on 0208 1502010.
