Life insurance is designed to provide financial protection for loved ones after the death of a person. However, it can sometimes become a source of conflict within families. Disputes may arise when individuals believe they are entitled to a death benefit or attempt to contest a will. Understanding how life insurance works can help clarify these situations and prevent misunderstandings.

Designated Beneficiaries

Life insurance policyholders can choose their beneficiaries for the death benefit. Beneficiaries can include family members, friends, or other individuals. The policyholder has complete discretion in selecting who will receive the benefit. Agents at Stonewall Grace Insurance can help you understand the process and requirements for listing beneficiaries.

Estate Rules Don’t Apply

Many people in Buena Vista, VA worry that the death benefit from life insurance will be tied up in probate court or automatically go to the closest heir. This is a common misconception. Life insurance death benefits are not part of the deceased person’s estate, meaning they cannot be contested in court or included in a will. Instead, the benefit is directly paid to the designated beneficiaries.

Medical Bills and Creditors

When someone passes away with significant debt, their estate may be sold to cover medical bills and other liabilities, leaving heirs with whatever remains. However, life insurance is not part of the estate and cannot be used to settle debts or cover medical expenses. Instead, the death benefit provides financial stability for beneficiaries, helping them recover from the loss of their loved one.

At Stonewall Grace Insurance, our experienced representatives are here to answer your questions and help you understand what happens to a life insurance death benefit. Contact us today to learn more. We proudly serve the Buena Vista, VA area.