When naming a trustee as policy beneficiary, it is good practice to name a back up beneficiary in case the trust is terminated (or, for some reason, never comes into existence or is for any reason, found to be defective). Consider providing that, if the trustee cannot accept the proceeds within a specified number of days (such as 90) after the insured’s death, the insurer may make settlement on the insured’s estate. This prevents an indefinite delay and benefits both insured and beneficiaries. Usually, if a bank is a trustee or co-trustee a provision should be inserted in the beneficiary designation exonerating the insurer from liability once it pays the proceeds to the trustee.
Reproduced with permission. Copyright The National Underwriter Co. Division of ALM