When you purchase a life insurance policy, you name the beneficiaries who will receive payment when you pass away. As long as these designated beneficiaries are alive, the profits from the policy will not go through probate. The beneficiary must file a claim with the life insurance company to start the process of receiving the money. This means that, in general, your beneficiary will be entitled to the death benefit more quickly than if it passed through your estate.
However, there are situations where a life insurance policy may have to go through probate. If all the beneficiaries of the policy have died, the money from your life insurance payment will become part of your estate and enter into legal proceedings with the rest of your assets and properties. In this case, creditors can be liquidated with these funds and payments received by loved ones can be significantly delayed. To help prevent your life insurance earnings from going through probate, always name a contingent or alternative beneficiary in addition to the principal.
This way, if the designated beneficiary is still alive and able to receive payment, they will get the check instead of it going through probate. Most life insurance policy payments do not require the participation of the probate court, even if other properties in your estate go through an estate. However, if life insurance has to go through this process, it could hinder beneficiaries and drastically reduce the amount of payment they were supposed to receive. Although all policies have a price, life insurance is generally considered a “safe investment” that will not generate surprising taxes or unforeseen deductions.
Take the time now to avoid having your life insurance go through probate so that your loved ones don't have to deal with more pain when you die.