What Does Per Stirpes Mean In Life Insurance?

Writing by Posted On: April 5, 2023
Rakibul Hasan
Chief Editor of - Free Insurance Tips

Meet Rakibul Hasan, the visionary leader and founder of Freeinsurancetips. With over a decade of experience in the insurance sector, Rakibul is dedicated to empowering...Read more

As we go through life’s milestones, we often encounter a variety of legal and financial terms that can be confusing and overwhelming. One of those terms is “per stirpes,” which can have a significant impact on how life insurance benefits are distributed to beneficiaries.

Per stirpes is a Latin term that means “by branch” or “by representation.” In the context of life insurance, it refers to a method of distributing benefits among the descendants of a deceased beneficiary. Understanding this term is essential for anyone who wants to ensure that their life insurance policy is distributed according to their wishes and that their loved ones are financially protected in the event of their passing. In this article, we’ll take a closer look at what per stirpes means in life insurance and how it can impact your policy’s beneficiaries.

What Does Per Stirpes Mean in Life Insurance? Per stirpes is a Latin term commonly used in life insurance policies. It means that if a beneficiary dies before the policyholder, their share of the benefit will be passed on to their heirs. For example, if the policyholder has two children listed as beneficiaries, and one of them dies before the policyholder, the deceased child’s share will be divided equally among their children. It ensures that the intended beneficiaries receive their rightful share of the benefit.

What Does Per Stirpes Mean in Life Insurance?

Understanding Per Stirpes in Life Insurance: Protecting Your Family’s Future

What is Per Stirpes and How Does it Affect Your Life Insurance Policy?

Per stirpes is a Latin term that translates to “by the roots” or “by the branch.” In the context of life insurance, per stirpes refers to a method of dividing the death benefit among your beneficiaries in the event of your death.

Normally, when you name beneficiaries on your life insurance policy, the death benefit is split equally among them. However, if one of your beneficiaries dies before you do, their share of the death benefit would normally be divided equally among the surviving beneficiaries.

Per stirpes, on the other hand, allows you to direct how your death benefit is distributed in the event that one of your beneficiaries dies before you do. With per stirpes, your deceased beneficiary’s share of the death benefit is passed down to their own children (your grandchildren) instead of being divided among your surviving beneficiaries.

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How Does Per Stirpes Work?

Let’s say you have three children and name them as equal beneficiaries on your life insurance policy. If one of them dies before you do, their share of the death benefit would normally be divided equally among your two surviving children.

However, if you have per stirpes designation in place, your deceased child’s share of the death benefit would be passed down to their own children (your grandchildren) instead of being divided among your surviving children. This ensures that your deceased child’s share goes to their own family rather than being divided among your surviving children.

For example, if your child who was named as a beneficiary on your life insurance policy passes away before you do, leaving two children of their own, your death benefit would be split into thirds. Each of your surviving children would receive one-third of the death benefit, and your deceased child’s two children would divide the remaining one-third equally between them.

Benefits of Choosing Per Stirpes in Life Insurance

Choosing per stirpes in your life insurance policy can provide several benefits, including:

1. Ensuring that your deceased child’s share of the death benefit goes to their own family instead of being divided among your surviving children.
2. Providing clarity and direction for the distribution of your death benefit in the event of a beneficiary’s death.
3. Avoiding potential disputes or legal battles among your beneficiaries over the distribution of your death benefit.

Per Stirpes vs. Per Capita: Which is Right for You?

Per capita is another method of dividing a death benefit among beneficiaries that is often used in life insurance policies. Per capita means “by the head,” and it distributes the death benefit equally among all surviving beneficiaries, regardless of their relationship to you.

So, if you have three children named as beneficiaries on your life insurance policy, and one of them dies before you do, their share of the death benefit would be divided equally among the remaining two children.

This is different from per stirpes, which passes the deceased beneficiary’s share of the death benefit down to their own children (your grandchildren).

Ultimately, the choice between per stirpes and per capita depends on your specific family situation and priorities. If you have a large family with multiple children and grandchildren, per stirpes may be the better choice to ensure that your death benefit is distributed fairly among your entire family.

How to Set Up Per Stirpes in Your Life Insurance Policy

Setting up per stirpes in your life insurance policy is a simple process that can be done when you first purchase your policy or at any time during the life of the policy.

To set up per stirpes, you will need to contact your life insurance provider and request to add per stirpes designation to your policy. Your provider will likely have a form or document that you can fill out to specify how you want your death benefit to be distributed in the event of a beneficiary’s death.

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Per Stirpes and Estate Planning

Per stirpes can also be an important consideration in your overall estate planning strategy. If you have a large family or complex family situation, per stirpes can help ensure that your assets are distributed fairly among all of your heirs.

When setting up your estate plan, it’s important to work with an experienced estate planning attorney who can help you navigate the complexities of per stirpes and other estate planning considerations.

Conclusion

Per stirpes is a valuable tool for ensuring that your life insurance death benefit is distributed fairly and according to your wishes. Whether you have a large family or simply want to provide for your children and grandchildren, per stirpes can help you protect your family’s future and provide peace of mind. Contact your life insurance provider today to discuss adding per stirpes to your policy.

Frequently Asked Questions

What is Per Stirpes in Life Insurance?

Per Stirpes is a Latin term that is used in life insurance to determine the distribution of the policy’s proceeds. It means that the proceeds of the policy will be distributed to the surviving descendants of the named beneficiary, if the beneficiary dies before the policyholder.

For example, if the beneficiary of a life insurance policy is the policyholder’s son, and the son dies before the policyholder, the proceeds of the policy will be distributed to the son’s children, the policyholder’s grandchildren. This is in contrast to per capita, where the proceeds would be distributed equally among the remaining living beneficiaries.

How Does Per Stirpes Work in Life Insurance?

Per Stirpes is a way to ensure that the policyholder’s intended beneficiaries will receive the proceeds of the policy, even if the named beneficiary dies before the policyholder. If the named beneficiary dies before the policyholder, the proceeds of the policy will be distributed to the surviving descendants of the named beneficiary.

For example, if the named beneficiary is the policyholder’s sister, and the sister dies before the policyholder, the proceeds of the policy will be distributed to the sister’s children, the policyholder’s nieces and nephews. This ensures that the policyholder’s intended beneficiaries will receive the proceeds of the policy, even if the named beneficiary is not alive at the time of the policyholder’s death.

What is the Difference Between Per Stirpes and Per Capita in Life Insurance?

Per Stirpes and per capita are two different ways to distribute the proceeds of a life insurance policy when the named beneficiary dies before the policyholder. Per stirpes means that the proceeds will be distributed to the surviving descendants of the named beneficiary, while per capita means that the proceeds will be distributed equally among the remaining living beneficiaries.

For example, if the named beneficiary is the policyholder’s son, and the son dies before the policyholder, the proceeds of the policy will be distributed to the son’s children, the policyholder’s grandchildren, under per stirpes. Under per capita, the proceeds would be distributed equally among the remaining living beneficiaries.

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How Do I Choose Between Per Stirpes and Per Capita in My Life Insurance Policy?

Choosing between per stirpes and per capita depends on your personal circumstances and preferences. If you want to ensure that the proceeds of your policy are distributed to your intended beneficiaries, even if the named beneficiary dies before you, per stirpes may be the right choice.

If you have multiple beneficiaries and want the proceeds of your policy to be distributed equally among them, per capita may be the right choice. It is important to consult with an experienced life insurance professional to determine which option is best for you.

Can I Change My Life Insurance Policy from Per Stirpes to Per Capita?

Yes, you can change your life insurance policy from per stirpes to per capita, or vice versa. You may want to change your policy if your circumstances change, such as if you have additional beneficiaries or if your named beneficiary passes away.

It is important to review your life insurance policy regularly and make changes as needed to ensure that your policy aligns with your current wishes and circumstances. It is recommended to consult with a life insurance professional before making any changes to your policy.

When you elect your beneficiaries, what does ‘Per Stirpes’ mean?

In summary, understanding the term “per stirpes” is crucial when it comes to life insurance. It ensures that your beneficiaries receive the intended amount of payout, even if one of them passes away before the policyholder. By having a clear understanding of this term, you can make informed decisions when selecting your beneficiaries and ensure that your loved ones are taken care of in the event of your untimely demise.

In conclusion, life insurance is a valuable asset that provides financial security to your loved ones in the event of your unexpected passing. Understanding important terms like “per stirpes” is necessary to ensure that your beneficiaries receive the intended benefits. As a professional writer, I urge everyone to take the time to review their life insurance policies and make any necessary updates to ensure that their loved ones are taken care of in the event of their passing.

Rakibul HasanChief Editor of - Free Insurance Tips

Meet Rakibul Hasan, the visionary leader and founder of Freeinsurancetips. With over a decade of experience in the insurance sector, Rakibul is dedicated to empowering individuals to make well-informed decisions. Guided by his passion, he has assembled a team of seasoned insurance professionals committed to simplifying the intricate world of insurance for you.

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