What aging individuals should know about wills and life insurance

Many people consider ways in which to transfer wealth with limited fees, taxes and liabilities. One way Alberta individuals can support this goal is through life insurance. Along with well-drafted wills, many aging Albertans invest in life insurance in order to support the inevitable life transfer. For many, this is the main benefit of keeping life insurance past younger years and into old age.

There are generally two types of life insurance policies: a joint policy and a personal policy. The latter covers the life of an individual, while a joint policy covers a couple. In some cases, two separate personal policies can be less expensive than a joint policy, so doing research on the best option is a good idea.

When the remaining spouse in a joint policy or a person holding a personal policy dies, the insurance proceeds can be received by the estate or can go directly to beneficiaries named on the policies. When they go to the estate, they become part of the estate value and are subject to probate fees. If given directly to beneficiaries, they will receive insurance proceeds tax-free. This is often seen as a benefit by aging people looking to transfer their wealth.

Beneficiaries can choose to use insurance payouts as they see fit. Often, these funds are used for things like eliminating capital gains from inherited properties, paying for funeral expenses or more personal needs. Those looking to understand the role life insurance may play in their overall estate plans and how to draft wills that align with insurance payee designations should contact an Alberta lawyer with experience in these matters.