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Life Insurance With No Beneficiary: Who Receives the Proceeds?

Law books. Researching life insurance with no beneficiary

When trying to determine who will receive the proceeds from a life insurance policy without a beneficiary, it can be confusing. Fortunately, there are some guidelines and processes in place that can help you figure out who is eligible for the money. Keep reading to learn more about life insurance with no beneficiary today.

If you are facing an issue about who gets life insurance proceeds, you need an experienced attorney. Call 602-443-4888 for a free consultation with one of our attorneys.

Life Insurance With No Beneficiary: Who Can Claim the Proceeds If the Sole Beneficiary Dies?

The life insurance company must pay the insurance proceeds to the listed beneficiaries. Anyone could be a beneficiary. It could be a spouse, child, third cousin, best friend, charity, or a trust. The insured can also list multiple beneficiaries.

Insurance companies normally allow the insured to list contingent or secondary beneficiaries. Those are people who can receive the benefits if the primary beneficiary has already died.

But if the primary beneficiary has died – and there are no secondary beneficiaries named – the insurer treats the policy as if it has no beneficiaries. The insurance company still needs to pay the life insurance out to someone. So, in this case, the insurer pays the proceeds to the estate.

The trick is that oftentimes, no one has thought about filing a probate action. As a result, the insurance company will locate next of kin and tell them that there are insurance benefits, and someone needs to open a probate.

If a life insurance policy does not have a named beneficiary at the time of death, in most cases a surviving family member can make a claim on the policy. Generally, only immediate family members are eligible to receive the proceeds. We are talking about a spouse, children, parents, or siblings. In some rare cases, other family members such as cousins or grandparents may be eligible. In some states, the policy must pay any debts that the deceased owed before distributing the money to beneficiaries.

What If the Insured and Beneficiary Both Died At the Same Time?

If the insured and beneficiary both die at the same time, the insurer will typically distribute the policy proceeds to the insured’s estate. Then the personal representative of the estate will distribute the proceeds to the legal heirs. In this scenario, a probate court will need to determine who the legal heirs are and resolve any disputes between them. The personal representative may then distribute the proceeds according to the terms of the deceased’s Last Will and Testament or by state law.

One typical situation is if the insured and beneficiary were in a fatal car accident. If there is any evidence that the beneficiary survived the insured (even by minutes), then the death benefit will pay the beneficiary’s estate. However, if no one can tell who died first, then the death benefit will go to the contingent beneficiary. If there is no contingent beneficiary, then the insurer will pay the death benefit to the deceased insured’s estate.

If there is any dispute about who is to receive the death benefits, the insurance company will file an Interpleader action.

What if the Beneficiary Dies Before the Death Benefit is Paid Out?

In this case, the insurer will pay the death benefit to the primary beneficiary’s estate. It doesn’t matter that there is a contingent beneficiary listed. The primary beneficiary is the recipient since they were alive at the time of the insured person’s death.

How is the Death Benefit Split Among Multiple Beneficiaries?

Now let’s assume an insured individual listed more than one beneficiaries. In that case, the death benefit will typically get distributed equally between them. This is unless specified differently in the policy or by the terms of a Last Will and Testament. In some cases, it may also be possible to specify differing percentages for each beneficiary. It is important to note that this process will involve extra paperwork and fees on behalf of the insurance company.

Can Unusual Circumstances Change Who Gets the Insurance Money?

Yes. In some cases, there might be special circumstances or an unusual situation. For example, the recipients of the insurance proceeds could be minor children. In that case, the insurance company will need to file a conservatorship action. Some states refer to it as a guardianship or something else. In any event, the court will appoint someone to hold the insurance proceeds until the children become adults.

Also, if the insured has outlived their designated beneficiaries, those funds can go to heirs of the deceased’s estate. If a beneficiary has already passed away when the claim is made, the funds will go to the living descendants of the beneficiary.

Is It Possible to Dispute an Insurance Company’s Decision?

Yes, if you believe that the insurance company’s decision is wrong, it may be possible to dispute their decision. Often, there are laws in place that to help. Those laws provide for a fair and impartial review process. During that process, the court will decide any disputes about the allocation of life insurance proceeds. The process typically involves submitting all relevant information to an independent arbitrator or mediator. That person then will then decide on the outcome. Alternatively, it may also be possible to take legal action if you feel your case has not been resolved satisfactorily.

Are You Involved in a Dispute Involving Life Insurance With No Beneficiary?

Life insurance policies without beneficiaries often lead to beneficiary disputes and family feuds. This is one of the most common reasons that life insurance companies deny claims. Relatives, friends, and even creditors file claims for the same death benefit. They all assert their claim to the life insurance proceeds. 
If you have a dispute with other beneficiaries, or the estate of the insured, you need a competent life insurance attorney. You might be the primary beneficiary or a contingent beneficiary. Or maybe you are an heir of the insured person’s estate. Regardless of your circumstances, we can help protect your rights as a beneficiary. We have the experience you need. 
Just give us a call at 602-443-4888. We’re here to help you get the money that rightfully belongs to you.


Founding attorney Paul Deloughery has been an attorney since 1998, became a Certified Family Wealth Advisor. He is also the founder of Sudden Wealth Protection Law.