Effects Of Parent" s Demise To A Child"s Life Insurance
When parents prefer to give their child a life insurance policy, the parent is the one who is responsible for paying the premiums. Moreover, the parent is also the one who chooses which life insurance option to avail. They are also the one who decides on the how long to maintain the life insurance plan. Apparently, the subsistence of the child's insurance greatly relies on the capacity of the parents to pay for the premium. Now, what will happen to the life insurance plan of a child in case his or her parent passes away?
Procedure
Usually, at the time a parent dies the entire assets and possessions of a person are distributed in accordance with his last will and testament. If there is a trust involved in the separation of assets, then the assets will be divided to the named beneficiaries or inheritor. And insurance plan possessed by a parent is considered as component of the parent's assets. For this reason, it will be divided in agreement with the parent's wishes.
Implication
The child may not get the life insurance policy his parents have left him until he reaches his legal age. A guardian or the remaining parent would obtain the possession of the life plan if the departed parent named a guardian or spouse as the temporary policyholder. In case the deceased parent did not designate any contingent policyholder, then the ownership of the plan will be determined by the will. Yet, if there is no last will and testament presented, the ownership of the policy will be determined by the courts in the state where the child live in.
Benefits
Yes, a parent's death will always be a distressing and heartbreaking moment for any child. But leaving behind an insurance plan will help the child lessen the financial burden of the parent's death. At the time the parent dies, the often takes over on the ownership of the policy if he is of legal age. Except if there are stipulations in the will of the parent or in the life insurance policy itself that says otherwise. Once the ownership of the policy is transferred to the insured, he is compelled to pay for the premiums and may opt for what he wants with the policy.
Warning
If the deceased did not indicate any legal guardian for the child and she is under 18, the court will appoint a lawful guardian. The financial legal guardian may not be whom the parent had desired to be the custodian of the child's policy. Thus, the parent should assign a legal guardian for the child to protect its interest in case the parent dies.
Procedure
Usually, at the time a parent dies the entire assets and possessions of a person are distributed in accordance with his last will and testament. If there is a trust involved in the separation of assets, then the assets will be divided to the named beneficiaries or inheritor. And insurance plan possessed by a parent is considered as component of the parent's assets. For this reason, it will be divided in agreement with the parent's wishes.
Implication
The child may not get the life insurance policy his parents have left him until he reaches his legal age. A guardian or the remaining parent would obtain the possession of the life plan if the departed parent named a guardian or spouse as the temporary policyholder. In case the deceased parent did not designate any contingent policyholder, then the ownership of the plan will be determined by the will. Yet, if there is no last will and testament presented, the ownership of the policy will be determined by the courts in the state where the child live in.
Benefits
Yes, a parent's death will always be a distressing and heartbreaking moment for any child. But leaving behind an insurance plan will help the child lessen the financial burden of the parent's death. At the time the parent dies, the often takes over on the ownership of the policy if he is of legal age. Except if there are stipulations in the will of the parent or in the life insurance policy itself that says otherwise. Once the ownership of the policy is transferred to the insured, he is compelled to pay for the premiums and may opt for what he wants with the policy.
Warning
If the deceased did not indicate any legal guardian for the child and she is under 18, the court will appoint a lawful guardian. The financial legal guardian may not be whom the parent had desired to be the custodian of the child's policy. Thus, the parent should assign a legal guardian for the child to protect its interest in case the parent dies.
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