Adding instructions to term life insurance to simplify payout?

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jasmino
Posts: 21
Joined: Mon Jul 16, 2012 4:14 pm

Adding instructions to term life insurance to simplify payout?

Post by jasmino » Fri Oct 19, 2018 11:05 am

I recently purchased a 30 year term life insurance policy and as morbid as it sounds, I thought about the scenario where my beneficiary would have to claim the life insurance proceeds. I have told my beneficiary, who has good money judgement, but not good money knowledge, that in general, they should send the proceeds to Vanguard and have the Vanguard advisors work with them to invest the money.

Is there a way I can help simplify this process now, before something like this ever happened? Is it possible for the life insurance company to have directions on file that the proceeds should be sent to this specific Vanguard brokerage account? Does Vanguard have any banking products that make it easy for a beneficiary to direct deposit the proceeds? If a Vanguard account all of a sudden received an infusion of $500,000 or more, would Vanguard advisors automatically contact the owner to see if they can offer any assistance with properly managing and investing the money?

Gill
Posts: 4726
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: Adding instructions to term life insurance to simplify payout?

Post by Gill » Fri Oct 19, 2018 2:10 pm

There must be a designated beneficiary of the life insurance, either an individual, a trust or an entity such as a charity. You should explore the possibility of having an unfunded trust as the beneficiary if you wish to avoid having a check sent to the beneficiary outright.
Gill

BruDude
Posts: 2794
Joined: Thu Dec 30, 2010 12:28 am
Location: Las Vegas

Re: Adding instructions to term life insurance to simplify payout?

Post by BruDude » Fri Oct 19, 2018 2:18 pm

You need a trust to make this type of designation. An insurance company is just going to pay out the money to whoever is the named beneficiary.

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