It seems to me that many people don’t fully understand that when you put a life policy in place you are preparing for when (not if) you die. If you follow that logic for a moment, you need to think about what happens to the proceeds in the event of your death. The Insurance Company will pay the proceeds to thePolicyholder or to the Assignee if the policy is assigned. They won’t care if there is a spouse or business partner as they will only legally be able to make the payment to the Policyholder or Assignee.  Therefore, if you have set the policy up with yourself as the sole owner the proceeds will go to your estate. Eventually when probate is granted the net proceeds of your estate will be distributed as per your will or if you had no will it will be distributed in accordance with the Succession Act 1965. However, as you probably know it typically takes somewhere between 6 - 12+ months to obtain a grant of probate depending on the complexity of the estate and how organised or motivated the personal representatives are.   

If we take for example a married couple, we'll call them John and Mary. John has put in place a Life Policy on himself owned solely by himself and has made a typical will leaving everything to his wife in the first instance. In the event of his death, the proceeds go to his estate not Mary.  She will inherit the proceeds in due course but she will have to wait until probate is granted.  So Mary will end up waiting maybe one year to gain access to the money. On the other hand, if John had set up the same cover (on his life only so no additional cost of insuring Mary) but jointly owned the proceeds would now be paid to Mary without any requirement for probate and without any exposure to John’s creditors. No additional cost and now the proceeds are going where they were intended. So, if like most people you have a couple of life policies you should look at how they are set up and think of what will happen WHEN not if you die.

If you have any further questions arising from this article we would be delighted to assist you with any inquiries you may have. If you would like to meet to discuss this or any of the other services we provide fill out the below form. The initial meeting is free.



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