Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insur...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Aug 31, 2021

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The Brief

  • Normally, life insurance polices aren’t considered part of an estate and therefore do not go through probate
  • Some circumstances do force policy proceeds into the probate process
  • Policy owners can avoid probate by keeping their policy up to date and taking some simple precautions

The process of handling a loved one’s death can be a traumatic and exhausting experience. The last thing a grieving person wants to worry about is life insurance. However, if a life insurance policy isn’t handled correctly, it can create more headaches.

Does life insurance go through probate? This question is frequently overlooked, but it can turn what should be a time of mourning into a nightmare of paperwork.

If your life insurance goes into probate, it can cost your beneficiaries the money meant to protect them from financial hardship. This is potentially devastating, especially if you bought life insurance for low-income families.

You bought life insurance to provide for your loved ones after your passing. You can prevent them from losing a dime of it by keeping your policy out of probate. Fortunately, you can make sure your beneficiaries are paid without a problem with some easy steps.

Read on to find out if life insurance goes through probate. Enter your ZIP code into our free comparison tool to see free life insurance quotes today.

What does probate mean?

Before figuring out if your life insurance policy will go through probate, you should understand the probate process.

The probate process begins after a person has passed. Probate courts handle matters of wills and estates, as well as things like guardianships. If a will is contested between two people, they are heard by a probate court.

When a person has a will, the probate court appoints a legal representative, called an executor, to handle the deceased’s estate. Usually, the will dictates who should be the deceased’s representative, but the court will assign someone if no one was designated.

Most people leave some form of debt behind, especially when they die unexpectedly or they’re very young. The executor is responsible to make sure that debt is resolved. Once everything is paid, the remaining assets are given to the heirs listed in the will.

As you might imagine, this requires a lot of work. On average, people spend a few months working as an executor. However, the process can take years in complicated cases.

Because of the time and effort executors commit to resolving an estate, they’re entitled to financial compensation. The amount they get paid varies by state, but it generally depends on the size of the estate.

The amount of time and money it takes to resolve the probate process is costly. The longer it goes on, the more it eats up resources meant for the bereaved.

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Is life insurance a probate asset?

Often times, life insurance is considered an asset. However, it’s typically not a probate asset.

Probate is usually for wills and the settling of estates. When an insured person dies, their life insurance policy automatically pays their beneficiary. There’s nothing for the court to decide, so there’s no reason for them to get involved.

The process of claiming life insurance is generally straightforward. The beneficiary should provide a death certificate to the insurance company. After the company verifies it, they send a check to the beneficiary. That check is cashed, and the policy is considered closed.

The process of probate is meant in part to resolve a deceased person’s debts. So, can life insurance proceeds be taken by creditors?

As long as the policy stays out of probate court, the money a beneficiary receives can’t be touched by creditors. However, if a policy goes into probate, its proceeds could be eaten up by unpaid debt.

When does life insurance go through probate?

A specified beneficiary (or beneficiaries) keeps life insurance proceeds out of probate. However, there are times when life insurance has to go through a probate court.

Remember, the probate court is meant to resolve where a deceased person’s estate should go. When a life insurance policy cannot be paid for whatever reason, the policy enters probate.

How can there be no beneficiary to pay on a policy? This is most commonly caused by forgetting to keep your policy up to date.

There are several ways your policy could have no one to pay:

  • Your beneficiary dies before you
  • Your beneficiary can’t be found
  • There are no beneficiaries named
  • Your beneficiary is a minor

When there is no beneficiary to give your policy proceeds to, a probate court will step in and decide where to allocate your money. In this process, the insurance payment becomes part of your estate and can therefore be used to pay off your debt.

In the case of a minor, insurance companies don’t hand payments to children. A probate court will step in and decide how to proceed with the minor, including possibly appointing a guardian.

You’ll want to do everything you can to avoid your life insurance policy entering probate. While life insurance can’t normally be touched by creditors, it will pay off debt if it enters probate. So, how do you avoid your life insurance from entering a probate court?

How to Avoid Probate

Avoiding probate is crucial if you want to protect your beneficiary from losing out on the money meant to take care of them.

The best way to keep your policy out of probate is to keep it up to date. Whether you have term or whole life, life insurance policies stay with you for a long time. It’s easy to forget to update them after major life changes.

Here are the best ways to keep your policy away from the probate courts:

  • Make sure your beneficiary is alive. If they die before you, call your insurance and choose a new beneficiary.
  • Ask your insurance company if you can have a per stirpes designation, which would pass policy proceeds to a deceased beneficiary’s children.
  • Choose a beneficiary over 18, or allocate policy proceeds into a trust for a minor.
  • If you have a will, make sure your heirs know they can’t change your life insurance policy.
  • You can name a contingent (or backup) beneficiary if your first choice cannot be paid for any reason.
  • You can also name co-beneficiaries. In this case, your life insurance would be split between the people you choose. If one (or more) cannot be paid, the insurance is paid to the remaining beneficiaries.
  • Update your policy after a divorce. If your ex-spouse is on your policy after you die, they could receive payment even if you’ve remarried.

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Probate and Life Insurance

There are few things in this life as painful as losing a loved one. Your life insurance policy is meant to take away some of the pain of your passing by easing some of the financial burdens on your loved ones.

If your policy ends up in probate, it will take valuable money away from your beneficiary. It also extends the amount of time it takes funds to reach their hands.

However, with a bit of planning, you can avoid the probate courts altogether. This is just one more way of showing your family you’re looking out for them even when you’re no longer around.

Asking, “Does life insurance go through probate?” is an excellent question for ensuring your family’s future. Enter your ZIP code below to find quotes for life insurance that will allow you to provide for your family no matter what.