Quora Answer: Is Life Insurance Part of an Estate Regardless of the Estate’s Debt?

The following is my answer to a Quora question: “Is life insurance considered part of an estate, subject to paying off debt, or is it solely for the beneficiary, regardless of the estate’s debt?” 

If a life insurance policy is not nominated to a beneficiary, then it is part of the estate of the deceased, and subject to the probate process.  This means the payout is consolidated with the rest of the estate, less debts and obligations, and the remainder disbursed to the heirs according to the will, or of there is no will, as per the direction of the public trustee in as equitable a manner as stipulated by law. 

If the life insurance policy is nominated to a beneficiary or beneficiaries, then is not part of the probate process, and is distributed according to the policy nomination to the beneficiary or beneficiaries.  The possible exception to the rule is if the deceased is a bankrupt, in which case the public trustee determines how much of it goes to creditors.