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What does life insurance go through probate mean? That question is the one that you must ask yourself when buying a policy for yourself. Do you really know what probate is? And, more importantly, does this particular type of insurance have to be paid out in the end? The answer to both questions: it really depends. If you've given away your insurance policy as a gift, then life insurance proceeds (the lump sum) are usually tax-free. In other words, your death benefit goes through probate even if you named a specific beneficiary to the life insurance policy in the first place. In fact, even life policies with a designated beneficiary don't pass through probate if you've given it away as a gift. This also applies to life policies that are set up with an investment component. You may have chosen to name a specific beneficiary to the policy, but if you've invested your money into it, the insurance company can take out a death benefit and sell it off to pay for the cost of the death benefit, and the investor's insurance. These types of policies also won't go through probate if they are “self-administered,” because the investor has provided everything required by the insurance company to administer the policy. However, if you've named another person as the beneficiary to the policy, then life insurance doesn't go through probate, at least not immediately. A beneficiary can't pass through probate if the insurance company doesn't trust him or her enough to let the beneficiary see the cash that the insurance company makes from selling the policy. Also, the insurance company won't allow anyone to transfer the beneficiary name to someone else, because the beneficiaries can't be named in a transfer document. If you're living in California and you're getting married there, your new spouse has to be named as your beneficiary on the policy in order to be able to collect the cash from it. Another important distinction between life insurance and other types of insurance is that the death benefits are paid out as a lump sum at the time of death instead of continuing to build up over time. This is what we refer to as a permanent life insurance. If you want to pay your bills monthly and have some extra money, a term life policy may be a good idea. However, if there's a reason that your income will continue to decline, you'll want to go with a permanent life policy. So what does life insurance go through probate mean? That means that your loved ones have a certain amount of time to gather together the money that they will need to pay the bills if they pass on before the insurance company takes the money out of the policy and distributes it among the beneficiaries. The amount of time varies depending on the insurance company, but it is typically two to ten years. This is the most important aspect of the whole process, as it provides you with financial security for your family. However, it is best that the cash is distributed as a lump sum payment rather than as a series of payments. Some policies offer you a choice between paying a lump sum and making payments monthly or as a line of credit. Others will allow you to make small deposits every month to help pay the bills, while others may allow you to build up a larger fund over time. gimgoi.com offer the option to build a larger reserves. Remember that not all insurance policies go through probate, but this is a critical factor in determining whether or not to buy one. A policy that pays out as a lump sum is usually less risky and is generally considered more financially sound. If you're married and you want to get the cash you need, an annuity is probably the best choice for your needs. If you are single, a term policy will give you the flexibility you need.