While most people think about wills and trusts when it is time for estate planning, Some people don't think about life insurance. Life insurance, however, can be a very valuable tool when planning for taking care of your final arrangements and final expenses. A good life insurance policy can help your loved ones pay for your funeral and burial expenses. Our readers in Florida should understand some basic information about life insurance so they can make a decision that enables them to use their policy as part of their estate plan.

How is life insurance distributed?

Life insurance policies are distributed to one beneficiary or several beneficiaries. When more than one beneficiary is listed, the ff per capita or per stirpes. Per capita means that each person will get an equal share. Per stirpes means that each class of people will receive equal amounts. The amount each group receives will then be divided equally among each person in that group.

What are contingent and primary beneficiaries?

A primary beneficiary is the person who will get the life insurance funds when you die. If that person passes away before you, the funds would be given to the contingent beneficiary. When choosing beneficiaries, you can choose a single beneficiary or a class of beneficiaries. This means it is possible for you to leave your policy for all your children. It is important, however, that you specify as clearly as possible who is included in the class if you opt to leave the policy to a group of people.

Anyone who is including a life insurance policy in an estate plan should make sure they fully understand the policy terms. Getting answers to questions about the policy and how it will work in the estate plan is vital for everyone.

Source: MassMutual, “Understanding Life Insurance Beneficiary Designations” Jan. 05, 2015