What Happens if There Aren’t Any Beneficiaries on a Life Insurance Policy?
Life insurance is typically very straightforward: The insured party dies and the policy benefits are paid out to the beneficiaries identified on the policy. Things can quickly become more challenging when it’s not clear to whom the benefits should be paid. What if there are no beneficiaries listed, or none of them are available? Does the life insurance company get to walk away with the premiums without paying out on the policy? Read on to learn about what happens when there are no beneficiaries available to collect on a policy. If you have questions about your life insurance policy, or if your family has been denied the benefits you are owed, call a zealous California life insurance denial attorney for help recovering the benefits you are due.
Life Insurance and No Beneficiaries
Typically, life insurance policies identify a beneficiary. The identified beneficiaries receive the policy benefits upon the death of the insured, assuming the claim is otherwise valid. Under certain circumstances, however, there may be no beneficiaries available to receive those benefits. The policy might not have specifically identified any beneficiaries, or the identified beneficiaries might have predeceased the insured party. If there’s no one left who is eligible to receive the benefits, what happens?
The insurance company is not off the hook. They are required by contract and law to still pay out the benefits they owe. If there are no beneficiaries to receive the policy proceeds, then the benefits will be paid to the estate of the deceased. The “estate” represents all of the assets possessed by the decedent at the time of their death–including cash, bank accounts, personal items, real estate, investment accounts, as well as debts and liabilities. The life insurance proceeds will be paid to that estate and will become part of the probate process.
Payment to the estate is the last resort when no other beneficiaries are available. Policies can list both primary and secondary or “contingent” beneficiaries. For example, a policy might state that the primary beneficiary is the policyholder’s spouse, but if he or she is no longer living, then the policyholder’s child should receive the death benefits as a secondary beneficiary. If there are no living beneficiaries identified by the policy, the benefits will be paid to the policyholder’s estate.
What Happens to Life Insurance Proceeds After They’re Paid to an Estate
Once the death benefits are paid to the estate, they become part of the estate. What happens next depends upon a variety of factors, including whether the decedent had a last will and testament, what debts they owe, which state’s laws apply, and which family members survive the decedent.
Typically, assets in the estate will first be used to pay off any debts owed by the decedent. The government will take a cut according to the estate tax as well as any other back taxes the decedent had yet to pay, and any other creditor will take their cut in accordance with debts owed (mortgages, credit card debt, legal judgments, etc.). Life insurance death benefits will join the pile of assets used to pay off that debt.
Any assets that remain will go to the decedent’s heirs and beneficiaries according to the decedent’s will. If the will states that everything goes to the decedent’s spouse, or that it will be split between the spouse and children, then the death benefits will join whatever division is applicable.
If the decedent died intestate, meaning they had no will, then the estate will pass to the decedent’s next of kin under the state’s intestacy laws. Typically, the decedent’s spouse and children will collect everything. If the decedent is not survived by a spouse or living children, then their estate will be divided among the next-closest group of relatives–first to siblings and parents, then to grandchildren, aunts and uncles, etc. State rules differ on which relatives get what share at which point of the intestate process. Life insurance death benefits will simply be part of the estate that gets divvied up.
Call a Seasoned California Life Insurance Denial Law Firm Today for Help Protecting Your Policy and Your Loved Ones
If your life, disability, or health insurance claim was wrongfully denied, or if you have otherwise been subjected to bad faith insurance conduct, fight for the coverage you are due with the help of the dedicated and trusted Los Angeles insurance denial lawyers at Gianelli & Morris. Call for a free consultation at 213-489-1600.