Generally speaking, it is not necessary to include a life insurance policy in an estate plan. It can be left on its own, and other assets can be divided with the estate plan.
There are some exceptions to this. For instance, some people will set their life insurance policy up so that it pays out into a trust, which is part of their estate plan. But in most cases, it won’t need to be included. Why is this?
The beneficiary has already been chosen
When you buy the life insurance policy, one of the questions the company will ask you is who you want the beneficiary to be. This is when you could list the trust, as noted above, but many people will just list a direct beneficiary. For instance, perhaps you’re a parent with a newborn, and that’s why you bought the life insurance policy. You can list your newborn as the beneficiary so that, when you pass away in the future and that child is an adult, they can get the insurance payout.
This means that the estate plan is largely irrelevant to the insurance company. For example, say that you have another child and you write in your will that both of your children need to split the life insurance payout. Your children are free to do this if they would like, but the child who is listed as the beneficiary technically could still keep the entire amount. The life insurance company does not have to follow the instructions in your estate plan and instead just pays out the person that you listed initially.
It is possible to update life insurance beneficiaries if you need to. Overall, though, this shows how complex certain parts of estate planning can be and why people need to know exactly what legal options they have.