A death benefit in life insurance doesn’t necessarily have to go to an individual; it’s possible to designate an organization, like a charity or trust, as the beneficiary. However, caution is advised when considering naming your estate as the beneficiary. Doing so could lead to probate, a legal process that could delay the distribution of funds to your loved ones and potentially reduce the amount due to taxes and fees. This could also expose the death benefit to creditors. It’s usually a better idea to designate specific individuals or organizations to ensure a smooth and timely payout.
Additionally, life circumstances can change over time — marriages, divorces, births and other major life events may necessitate updates to your beneficiary designations. Regularly reviewing and updating your life insurance policy helps ensure that your wishes are still reflected, and that the right people or entities are set to receive the death benefit.