Are the proceeds from a life insurance policy considered part of the estate or subject to terms in of the will?

Unless the estate itself is named as the beneficiary of a life insurance policy, it is not considered to be part of the probate estate and is not controlled by a Will.  Instead, a life insurance policy is like a contract between the insurer and the insured with a promise to pay a certain amount to the named beneficiary or beneficiaries when the insured dies.  Even if the Will stated that life insurance should go to someone else, it is the beneficiary designation made by the insured that controls who receives the payout, not the Will.  The confusion made be that life insurance proceeds are considered estate assets, because they were an asset of the person who died, but they are not probate assets, which are a sub-set of estate assets that are controlled by Wills.  Retirement funds, for example, are also estate assets but they are paid out to designated beneficiaries, not by Will.