New life insurance policy

justin9

I have just taken out a new life insurance policy however I am a little unsure of what would happen in my death. I am living with my partner and we have 3 children between us. However I am still married to my ex. What would happen to the money?

dunstonh

How did you write the policy? i.e. single life-single owner, single owner-joint life, joint owner-single life, life of another or in trust?

However I am still married to my ex. What would happen to the money?

Assuming its single life, single owner and not in trust, it would go into your estate.

Sally_A

I've not done life assurance for years, but think you can specify the beneficiary.

jonesMUFCforever

Sally_A wrote: »

I've not done life assurance for years, but think you can specify the beneficiary.

You can do this but you can also make a will specifying where the funds should go.

justin9

If I made a will specifying the beneficiaries would this cover me?

jonesMUFCforever

justin9 wrote: »

If I made a will specifying the beneficiaries would this cover me?

yes but make sure you get the will drawn up professionally.

justin9

The insurance gave no options to specify a beneficiary. This sounds stupid but if it goes to my estate who would likely benefit?

Nearlyold

Make a will so that you decide otherwise see https://www.citizensadvice.org.uk/relationships/death-and-wills/

Weighty1

justin9 wrote: »

The insurance gave no options to specify a beneficiary. This sounds stupid but if it goes to my estate who would likely benefit?

The proceeds would be distributed according to the process of intestacy which would likely mean your estranged spouse would get a large chunk of the proceeds.

Having a will is VERY important, however, since you are not married to your new partner it doesn't necessarily remove all possible problems. Depending on how much cover you have taken out then an inheritance tax liability could arise in the event of your death meaning the people you want to benefit from the cover receive substantially less than anticipated. Also inheritance tax has to be paid before the life cover is distributed so it's a chicken and egg scenario...the money is there but they can't get it until they pay the inheritance tax, which they can't pay until they get the money etc etc etc.

mgfvvc

justin9 wrote: »

The insurance gave no options to specify a beneficiary.

AIUI to specify a beneficiary the insurance needs to be "written in trust". If you have a financial adviser they should be able to sort this out for you. If not, then the insurance company should be able to supply the necessary forms.

magpiecottage

It is normally possible to put an existing policy into trust. This means it can be paid out without waiting for probate - and it is unaffected by any will or lack of one.

Provided you are in good health at the time then this will also avoid it being included in your estate for Inheritance Tax purposes. However, HMRC may usually want to see evidence of good health. If a policy is taken out in trust at outset, then the fact that the insurance company accepted it will usually be sufficient but the longer the gap between taking it out and putting it into trust, the more likely it is that HMRC will want more evidence.