Life Insurance with Free Will

Thinking about life insurance sparks the thought of passing away in the future.

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Thinking about life insurance sparks the thought of passing away in the future. It makes you ponder your estate and what happens after you die. That can also make one realise that they don’t have a will to direct estate executors on what to do with your assets after passing.

Writing a will is the way to solve that issue, and often a professional service gets included with purchasing a policy. This guide will walk you through the amalgamation of life insurance and the details behind the corresponding will.

What is Life Insurance with Free Will?

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Life insurance is a financial product that offers a payout in a cash lump sum should a policyholder pass away during an agreed term. However, those researching and weighing up options for a policy will likely come across providers that advertise life insurance with free will.

So what does that mean, and why is it now common practice to include free will in life insurance products? That’s because creating a choice is now arguably imperative to what life insurance offers, mainly to avoid confusion and organise your estate post-death.

Life insurance with free will is the policy itself with a complimentary will writing service, where professionals will help plan your estate without additional cost. But you may lack the more detailed information about wills, so let’s go into the details.

What is a Will?

You may have heard the term ‘will’ about leaving money or other assets behind to loved ones or other beneficiaries.

You may have heard the term ‘will’ about leaving money or other assets behind to loved ones or other beneficiaries. That’s essentially the definition of a will, albeit there’s typically more detail than directing how your belongings get dispersed.

A will is a legal document that advises your assigned executor on dealing with your estate. It distributes assets under your name to defined beneficiaries on the choice. It can also include wishes for what happens after you die.

Wills can take a more exact shape and outline wishes and estate sharing between a maximum of six beneficiaries. There are also more complex will options that typically deal with more meticulous assets like trusts and tax planning.

Some will argue that there is not much in their estate or that dispersion of assets to loved ones is a relatively simple task. Persons commonly ask whether they even need a will, given the personal hassle involved.

Do I Need a Will?

There’s no legal obligation to write a will. However, suppose you own assets and have beneficiaries you’d like to provide an inheritance. In that case, there’s a strong recommendation for writing a choice.

Suppose you own property or have a significant amount of cash you’d like dispersed amongst your loved ones. In that case, a will makes this a seamless process after you pass away. Otherwise, your estate is subject to the Rules of Intestacy, meaning persons with whom you didn’t intend to share your estate may receive a portion.

We reiterate that having a will would be of utmost benefit if you have any property, saved money, or other valuable assets. If you have children, you can also use the will to assign them a legal guardian should you pass away while they are still underage.

So what gets covered when writing a will?

What Does a Will Cover?

A will covers your entire estate, or what you have in your legal possession, and disperses it to beneficiaries upon death. You’ll outline the individuals (or organisations) with whom you want to share your assets and where the executor of your will takes action after you die.

Creating a will involves taking note of what you own and gauging how much you’re worth. Typical assets in a will include:

  • Any property you own, such as your home
  • Money in your possession, such as savings
  • Any businesses you own
  • Pension funds
  • Stocks, shares, investment trusts, and premium bonds
  • Vehicles like cars and motorhomes
  • Valued assets such as jewellery, furniture, sentimental items, and heirlooms
  • Life insurance and endowment policies

Wills will also assign any outstanding debts you have to the beneficiaries, such as mortgages, credit cards, and overdrafts. Debts can usually get settled with funds distributed through a will. However, it’s important to note how to take action should you pass unexpectedly.

What Other Assistance Can a Will Provide?

We covered what a will typically cover, but we mentioned that it could help with other uncertainties. Writing a will can highlight some of the precarious questions that may arise after you pass or die unexpectedly.

A will can assist in the following:

  • Naming the guardians of your children (or step-children) for those who are under the age of 18
  • The course of action to take if beneficiaries pass away before you do
  • Highlight the executor you wish to take action on your will or how to select one should no preferred executors be able to carry out the tasks.
  • Specific post-death actions such as arranging funerals or organising care for your pets

So with everything a will can cover, what happens if you don’t write one before passing away?

What Happens If I Don’t Have a Will When I Die?

A legal mechanism exists to handle your estate should you pass away without a will. The term is “dying intestate”. The definition is where your assets get distributed according to intestacy rules.

The concern about not having a will for many is that the rules of intestacy may share your estate in a manner that doesn’t align with your final wishes. Persons related to you may receive a portion of your estate without any intention of passing something to them.

Under the current rules of intestacy in the UK, “only married or civil partners and some other close relatives can inherit”. While usually a surviving spouse or children would be your primary preference for your estate, complicated matters can arise without direction on distribution.

The legally married or civil partner would be the estate’s beneficiary under the intestacy rules, meaning they will inherit most of the estate left by the deceased. Your wishes may be that your children get assigned specific assets. Yet, without a will, they would get inherited by the surviving partner.

The bottom line is that if you have any intention for your assets to go to a specific beneficiary, writing a will is strongly recommended.

So now, with the details of the will outlined, you might wonder what the correlation between writing a will and life insurance is?

Do I Need a Will If I Have Life Insurance?

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You’ve probably understood that writing a will is imperative if you have any assets you’d like to see distributed according to your wishes. Securing the document can avoid much confusion and conflict after you pass away.

But what of the matter of life insurance? Do you need one of you to have a policy?

The fact that providers will offer a free will writing service with life insurance policies outlines the importance of writing a will. The procedure is an asset in your estate. When you pass away, it will get distributed to your chosen beneficiaries with a choice.

Without one, again, matters can get complicated.

However, one should note that a provider offering free will writing service does not automatically mean the life insurance policy is better than competitors. Some insurers will attempt to attract customers to their plans by adding complementary services, yet insignificant if the monthly premiums are high.

It’s worth seeking recommendations from experts or brokers if you’d like a will writing service included in your life insurance. And with that in mind, let’s reiterate the benefits of having a will to highlight it as a necessary part of estate management.

What are the Benefits of Having a Will?

For clarity, we can outline the most significant benefits of having a will to manage your estate after you pass away. Those include:

  • Offer gifts of your possessions and money to your family.
  • Ensure that all your beneficiaries receive assets according to your wishes
  • Name legal guardians for your underage children.
  • Decide on who will manage your post-death affairs (executor)
  • Make funeral arrangements in line with your wishes.
  • Avoid the rules of intestacy.
  • Safeguard your partner if you’re not legally married or have a civil partnership.
  • Protect your family home
  • Plan for taxes such as inheritance tax and minimise the amount paid
  • Make additional post-passing arrangements such as pet care

While the benefits mentioned above are driving factors in why one should write a will, there are plenty of minor ones, too. So if you wanted to write a will simultaneously with taking out a life insurance policy, do all providers offer the free service?

Do All Life Insurance Providers Offer Free Wills?

Not every provider will offer a complementary will writing service with their life insurance policies. However, it’s becoming more practised among leading insurers to add more value in a competitive market.

Even if a will writing kit costs extra with a life insurance policy, it’s a worthwhile addition considering the convenience and the peace of mind of getting your will sorted. But if you seek to have a will writing service included with the insurer, we’ve named a few below.

1. Smart Insurance

Smart Insurance offer its customers a free willing writing kit worth £100 with any inquiry about their policies. The package includes intuitive yet detailed instructions on everything about drafting a will that will take care of business when you pass away.

2. Beagle Street

Beagle Street has a free-will writing service they will provide upon purchasing one of their life insurance policies. The policyholder will get paired with a will writing specialist, who will request information and documents and draft a will according to your wishes.

3. Virgin Money

Virgin Money offers a similar service as mentioned above, where a free will writing service becomes available when a person purchases their policy. As soon as the plan gets settled, you can provide all your necessary details with the paired will specialist to draft an appropriate document.

So lastly, let’s cover the most typically asked follow-up questions to wills to ensure a more concise understanding of the document and process.

FAQ: Life Insurance with Free Will

Yes, there is a minimum age of 18 to ensure the will is legally valid.

No, children under 18 cannot be beneficiaries of the will. Should you pass away and wish to and any assets to your underage children, funds or assets would need to be placed in a trust until they become legal adults.

Persons writing the will may also define what age they can access your assets as many believe 18 is too young to inherit such responsibilities. These details will get incorporated into the document by the specialist or writer.

Yes, but you will need to go through the process of official alteration, known as ‘codicil’. That means officials and witnesses must review amendments and sign off on the changes just like your original will.

Persons should review their will every few years to ensure current personal and financial circumstances align with their wishes. However, suppose you need to make significant changes to your existing will. In that case, the recommendation is to scrap the original and write a new one.

You can legally write your own will in the UK. However, as it is a legally binding document, there’s a recommendation that a professional writes and reviews the draft. They will ensure it accurately portrays your wishes and is legally actionable.

Even minor errors can cause issues with your will, rendering it invalid. So if you’re unsure about writing your document, specialist help is the best avenue to go down. There are many affordable professional will writing services in the UK.

Yes. One of the key benefits of a will is that you can name any person or organisation as a beneficiary of your estate.

This benefit means you can organise who gets what out of your estate without the risk of unintended assets falling to partners or close relatives under intestacy rules.

We recommend keeping your will somewhere safe that you’ll remember or with someone you trust. Typically, it will get stored with specialists, executors, or solicitors.

Note where your will gets stored, and share this information with your executors.

When a life insurance policyholder passes away, the payout is typically provided to the named beneficiaries in the policy. If the policyholder also has a will, it can further specify how the proceeds should be distributed. It is important to keep both the life insurance policy and the will updated to ensure smooth distribution of assets to the intended recipients.

To claim a life insurance payout when a will is in place, the beneficiary or the executor of the will should notify the life insurance company of the policyholder’s death. They will need to provide a copy of the death certificate and complete a claim form. The life insurance company will then review the claim and, if approved, distribute the payout according to the policy’s terms and the will’s instructions.

A will is a legal document outlining how an individual’s assets, including life insurance proceeds, should be distributed after their death. A trust, on the other hand, is a separate legal entity that can hold assets, such as a life insurance policy. A trust can help avoid probate, reduce estate taxes, and provide more control over the distribution of assets. While a will is generally simpler and less expensive to create, a trust offers additional benefits and flexibility depending on individual circumstances.

Life insurance payouts are generally tax-free in the UK. However, if the policy is not written in trust and the payout forms part of the deceased’s estate, it may be subject to inheritance tax. By writing a life insurance policy in trust, the proceeds can be kept separate from the estate, potentially avoiding inheritance tax and ensuring a quicker payout to beneficiaries.

While you don’t necessarily need a solicitor to help with your free will provided by the life insurance company, it can be beneficial to consult with one if you have a complex estate or specific legal concerns. A solicitor can provide expert advice and ensure that your will accurately reflects your wishes and complies with UK law.

Yes, you can change your life insurance policy after creating a will. However, it is essential to update your will accordingly to ensure that your intentions for the life insurance proceeds are accurately reflected. Regularly reviewing both your life insurance policy and your will ensures that your loved ones are taken care of according to your wishes.

A joint life insurance policy covers two individuals, typically spouses or partners, and pays out upon the first death. The payout usually goes to the surviving policyholder. If a will is in place, it should specify how the life insurance proceeds should be used or distributed after both policyholders pass away. It’s essential to keep the will updated to reflect any changes in circumstances or wishes.

While it is not required to include life insurance policy details in your will, doing so can provide clarity for your executor and beneficiaries. It is essential to provide the policy number, insurance company, and any relevant contact information.