With a life insurance policy, the owner can designate beneficiaries, and at the death of the owner, the policy pays the death benefits directly to the designated beneficiaries. The benefits are paid in accordance with the contractual terms of the policy. So long as a beneficiary is named, no probate is required and the person's Last Will & Testament does not come into play. This is one of the nice benefits of life insurance.
However, even though the life policy can be designated to pay directly to a beneficiary and not go through probate, the role of life insurance in an estate plan should involve some thought. For example, consider parents who have minor children and want the life insurance benefits to be available to provide for the children in the event of the parents' death. The parents would not want to name the children directly as beneficiaries on the life policy for several reasons. First, since they are minors, it likely would require opening guardianships for each of the children--not usually desirable since guardianship is slow, expensive, etc. Secondly, the life policy likely will pay out all at once--again, definitely not a good idea with minor children and sometimes even with young adults.
One "do it yourself" solution I've seen is for the parents to name another adult person--like one of their siblings--to receive the death benefits with the understanding that they'll be used to take care of the children. There are multiple risks with this approach. For one, the proceeds belong to the recipient and they can use them other than as you intend. In other words, you're at their mercy to follow your wishes but they are not legally bound to do so. Also, the funds could become the subject of a lien--like the IRS--or a creditor's judgment entered against the recipient. In that case, the children's money is at risk and may not be there for their benefit.
So is there a viable solution?
If the parents establish a Living Trust (also sometimes called a "Revocable Trust'), they can name the Trust as the beneficiary of the life policy in the event both parents die. The Trust can then provide for distribution for the children's health, education, maintenance and support until the children reach a responsible age. By doing this, the parents accomplish several benefits. First, guardianships will not be required. Second, the policy benefits will be held and managed by the Trustee who will use the funds as instructed by the parents. The children will not get any lump sum until they are adults and reach a designated age (sometimes 25 years or older). Furthermore, because the funds are held in the Trust, they are not at risk of loss to outside forces like the IRS or a creditor.
Upon engaging in the estate planning process, you should discuss with your attorney any life insurance you own and how it should fit in to your plan.