Question:

Term Life Contingent Beneficiary?

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I'm about to enact a Term Life policy with my wife as sole beneficiary, no contingency. If we both die in the same incident (plane wreck, car crash, etc) what happens to the money? Does it automatically go to my estate (where I want it) so the will designates its usage? Or is there some way to specifically designate this under the contigency beneficiary section to ensure it happens? I have some very specific requirements for the money in this instance that cannot be addressed properly on the insurance forms (thus the will).

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  1. Yes, it goes to your estate.  Your WILL cannot say "pay this guy".  Your will distributes any leftover assets after all your debts are paid.  So, if you want the money to go to a particular person, you have to make them contingency.  Otherwise, it will go to pay off:  mortgages, cars, credit cards, student loans, final medical expenses (from when they tried to save you), and only if there's anything left, will the Will come into play, with how it's distributed.

    Sounds like you need to set up a TRUST, and have the contingency be the TRUST.  THAT'S how you address the very specific requirements.  Once the money goes to someone, it's theirs, to do with whatever they want.  If you want it spent in a particular way, you need to set up a trust.


  2. You need to designate your estate as the contingent beneficiary.  Check with the insurance co. to see if they can accomodate that.  You may have to set up a trust.

  3. If you die with no beneficiaries, your money will go to your state.

    How it is distributed will be something that you need to talk to your lawyer. But when there are no contingent beneficiaries, and the beneficiaries have passed away, the money will go to your state.

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