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Quite often beneficiaries of a life insurance policy get confused. With the laws about it. This can sometimes get mingled in with the estate laws. It is not uncommon for a beneficiary of a life insurance policy to also be an executor of the will. The will is the last wishes of the deceased. It will deal with the assets that the deceased owned at the time of death. Creditors will often come after the estate. To get the money that’s owed to them by the individual that has passed away. Beneficiaries get concerned. About whether the money that’s left to them via the insurance company becomes part of the estate.

Is An Insurance Policy Included in an Estate?


Every country has its own rules. But the simple answer when it comes to Canada is the insurance policy is not included in the estate. There can be rare exceptions to this rule. In most cases, the insured will have named a beneficiary for the insurance policy. This may happen to be also the executor of the will. Or, it may not be anyone that is named in the will or has anything to do with it.

The beneficiary does not have any obligation to include the insurance money in the estate. Creditors or anyone coming after the estate cannot have any claim on the money. That received by the beneficiary. In most cases, the insurance company will make the check payable to the beneficiary. Not to the estate. If it gets made to the estate than this can create a different scenario.

Can Life Insurance Proceeds Get Taken By Creditors?

Creditors of the deceased can only come after the estate. If the life insurance policy is not part of the estate than the creditors will have no claim to it. Sometimes there can be confusion with mortgage life insurance. Individuals, when buying a home and are mortgaging it, may need to take out life insurance. Some assume that this is life insurance that the homeowner is going to receive in the event of a partner’s death. This type of insurance is in place to protect the company providing the mortgage. It does not provide cover for the deceased’s spouse. This payout would go to the mortgage company. There can be a lot of legal issues with this type of insurance. One needs to deal with their legal professionals. Should any issues arise from this type of insurance.

Is Life Insurance Part of Probate?

Many individuals will leave a will. This is a testament to their last wishes upon their death. Wills can vary in their content. Most often it will give clear instructions on what they want to be done with their assets. Wills are a very important document. To make sure that they are valid there is a law in place called a probate law. Probate is a process that determines if the will is valid or not. It also helps to determine if the executor named in the will has the right to deal with the assets. As outlined in the will itself.

The executor is someone that the deceased has chosen to take on this responsibility. It does not mean that probate has to get carried out in every instance. Quite often when there are not a lot of finances or assets to deal with there is no necessity for or probate. Also if nobody is contesting this type of will, then it will not need probate either. The will is the estate of the deceased. If it contains real estate or a large number of assets than probate will be necessary.

In the majority of cases when a beneficiary gets named on a life insurance policy, this does not have to go through probate. There can be exceptions to this depending on the provinces. It most likely will come into probate if someone is contesting the right of the beneficiary. To receive the money.

Complex Laws and Life Insurance

There are many different types of life insurance that an individual can buy. This can lead to it getting involved in complex laws when it comes time to pay out. For example, there can be a life insurance policy held between two people. This gets referred to as a joint last to die policy. In this case, it can be difficult to determine how the value of the will is going to play in with the estate. In the circumstances such as this, it is wise to get legal advice. When dealing with the insurance company to know what happens with the policy in the case of a will.

Who is the Beneficiary?

Another important factor when it comes to life insurance is who is named as the beneficiary. In some cases, the estate gets named as the beneficiary. When this happens then the value of the insurance policy gets included in the assets of the estate. It will most likely be subject to probate.

Who Will the Insurance Company Pay?

Insurance companies throughout different provinces have their own rules and regulations to follow. In Ontario, there is an Ontario Insurance Act. In this act, it outlines that the insurance company must have sufficient evidence. About who the value of the insurance is to get paid out to.

Being Informed


When anyone is planning their finances for the future, they have to get informed. Part of this planning often includes the making of a will. It is important that individuals that are making a will do so with the proper legal advice.

Being informed when buying life insurance is also important. It must be clearly understood who the beneficiary is going to be. It should never be assumed that the life insurance payout will go to an individual’s spouse. If they have not been named as beneficiary.

When one is filling out their insurance application they are asked to name who their beneficiary is. It is not an impossibility to forget to fill in this part of the application. It could get overlooked by the insurance company. Or get ignored if the individual has not filled in a beneficiary. In this case, most likely the life insurance with then become part of the estate. As per the executor’s responsibility.