Life Insurance with No Beneficiary: Who Gets the Payout If They Die?

Typically, life insurance policies are straightforward, regardless of whether it is an entity or a person, as it can become very complicated when things get clear, especially when it comes to the primary beneficiary who will receive the death benefit once the insured person dies.

In this article, our life insurance lawyers will address these and other relevant inquiries. If the recipient passes away prior to the insured individual or before they obtain the payment from the policy, who will be entitled to receive the payout? What occurs with a life insurance policy in the absence of a designated beneficiary?

If you are dealing with such problems, it is advisable to consult one of our attorneys. For a complimentary case assessment, please dial 888-510-2212. The alteration of significant circumstances can affect the distribution and impact of the death benefit that different recipients must assert, potentially leading to these kinds of scenarios.

What Happens to Life Insurance with No Beneficiary Named?

In the event of the insured’s death, if there is no designated beneficiary for the life insurance policy, the estate of the deceased insured will receive the death benefit.

The process of administering one’s estate, referred to as probate, is overseen by a court and depends on various factors, including whether the person had any outstanding debts or a will, where they lived, and whether they were insured. Estate refers to someone’s possessions, property, and belongings. The process can take up to a year or more. In our article about life insurance, we will further explain probate and its connection to life insurance. Our article is intended to provide more information on this topic.

After the completion of the estate planning papers, the life insurance payment is incorporated into the overall estate assets and is managed and allocated once it is transferred to the estate.

Let’s assume that you are one of the beneficiaries of the estate, holding a 50% share of the total assets. In the unfortunate event that the insured individual and the primary beneficiary pass away in an accident, the life insurance payout will be included in the estate. However, it is important to note that you are not specifically mentioned as a beneficiary on the life insurance policy.

However, as a component of the estate, the life insurance death benefit is currently liable to state and federal taxes and will be utilized to settle any outstanding debts prior to its distribution to the insured individual’s beneficiaries. Consequently, this implies that you will obtain a reduced sum compared to what you would typically receive as a life insurance beneficiary. If there are any remaining benefits to be received.

If the insured passes away without a will (referred to as “intestate”), the state laws of the insured’s residence will govern the distribution of their estate. In the absence of any living relatives, the state will claim the remaining assets.

what happens to life insurance with no beneficiary

What if a Life Insurance Policy Has Multiple Primary Beneficiaries and One Dies?

A policyholder has the option to designate several main beneficiaries and multiple alternate beneficiaries.

If one of the co-beneficiaries passes away and there are multiple beneficiaries, the proceeds from the life insurance policy will be divided among the remaining beneficiaries.

For example, if the insured’s sister and spouse are co-listed as contingent and primary beneficiaries, each of the surviving beneficiaries would receive one-third of the amount the insured receives before passing away, depending on the manner of distribution under the law.

The spouse and the brother will each receive an equal share of half the amount, as the life insurance payout is divided equally among the remaining beneficiaries based on per capita distribution requirements.

In our example, the heirs of the deceased primary beneficiaries will receive a per stirpes distribution, which amounts to one-third of the death benefit their mother was entitled to, if the insured’s sister had children.

if a beneficiary dies who gets the money

What if the Insured and the Primary Beneficiary Die at the Same Time?

Depending on the order of death, the life insurance payout can be received by either the insured’s contingent beneficiary, their estate, or the beneficiary’s estate in situations of simultaneous demise. This occurs when both the insured and the primary life insurance beneficiary pass away within a 24-hour period.

Let’s consider an example where the insured and the primary beneficiary were in the same fatal car accident, and there is proof that the beneficiary who lived longer than even a few minutes will benefit from the life insurance policy upon the insured’s death.

If there is evidence indicating that the beneficiary passed away prior, the death benefit shall be given to the alternate beneficiary. In case there is no alternate beneficiary, it will be allocated to the estate of the insured individual who has passed away.

Initially, the life insurance provider will presuppose that the insured individual survived the beneficiary and will disburse the benefit to the alternate beneficiary (if one is specified) or to the estate (if no secondary beneficiary is designated), in case it remains uncertain as to who among the insured or the beneficiary passed away first.

Who Receives the Payout if the Beneficiary Dies Before the Benefit Is Paid?

The policy benefit, if the primary life insurance beneficiary dies, will be transferred to the primary beneficiary’s estate. The primary beneficiary, who has been alive since the time of death, will receive the death benefit. Even if the insured had a contingent beneficiary listed, the primary beneficiary remains the recipient.

Who Gets the Money if the Sole Beneficiary Dies?

The same time can insure multiple beneficiaries on the list. It can be anyone from the insured’s spouse or ex-spouse, adult children, siblings, business partners, charities, or trust. Life insurance companies must pay the proceeds to those listed as beneficiaries.

In the event that the primary beneficiary cannot be located, passes away prior to the insured, or passes away at the same time as the insured, the life insurance payout will be received by them. Additionally, they have the option to designate a secondary or contingent beneficiary other than the primary beneficiary.

If the deceased does not have any listed beneficiaries or if the primary beneficiary of a life insurance policy dies, it is likely that the estate will have to pay taxes. In this case, it can take significantly longer for the family of the insured to receive the death benefit. Without a listed beneficiary, the death benefit claim will not be paid out to anyone. However, if there are no listed beneficiaries, the policy is viewed as having no listed beneficiaries, and if the primary beneficiary of a life insurance policy dies, there is no secondary beneficiary listed.

sole beneficiary of a life insurance policy dies

Contact a Life Insurance Lawyer if You Are Involved in a Beneficiary Dispute

Beneficiaries are entitled to claim life insurance proceeds, which they can claim as the same benefit for death. Even creditors, friends, and relatives can file claims for the same benefit. One common reason that life insurance companies deny claims is due to family feuds and disputes, which often lead to beneficiary disagreements in life insurance policies.

If you are involved in challenging disputes with the insured’s estate or other beneficiaries, you should seek legal advice from a competent life insurance attorney. Whether you are an heir or a contingent beneficiary or a primary beneficiary, we can help protect your beneficiary rights and assist you in collecting the entitled payout. We have handled all situations above and have the experience you need to handle these cases.

One of our most successful stories involved a dispute between three competing claims: our client’s, the contingent beneficiary, the insured’s estate, and the estate of the primary beneficiary, who recently passed away. We were proud to have recovered $1.1 million for our client after filing an interpleader. You can read about this specific case example here.

Please call 888-510-2212 to speak with one of our attorneys regarding your life insurance case. We will not charge any legal fees unless we win your case.