What happens if a life insurance policy beneficiary died before the deceased owner of the policy? What happens to the funds?

  • by Lorna
  • Jan 02,2018
  • 15 answers

What happens if a life insurance policy beneficiary died before the deceased owner of the policy? What happens to the funds?


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Insurance Answers (15)

lucy 5 months ago

https://www.lifeinsurancetypes.com/what-...
Found this site which decides the debate of (whose) estate it goes to.
Below copied from the site
However, if there are no other beneficiaries listed on the policy, the insurance company will generally pass the policy proceeds into the insured’s estate. This can have definite tax and legal consequences. The proceeds will be added to the sum total of the estate’s value, and will be divided according to the deceased person’s will, or according to prevailing state law if the person died intestate (without a will). In some cases, state law will prevail and the insurance company will be forced to comply with the law regarding distribution of assets to family members, no matter what the company’s normal policy.

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mbrcatz 5 months ago

If there's no other valid beneficiary, it gets paid to the estate of the insured. That really stinks, because then the estate has to pay all the debts of the estate before ANYONE can inherit.
There's no "dibs" on life insurance money.

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Insurance Pickle.com 5 months ago

Presuming that's the only beneficiary, then it pays back to the estate of the insured like most of the others have said. Otherwise, unless otherwise specified, it would go to the other primary beneficiaries or to the contingent beneficiaries. It would only go to the beneficiary's estate if the beneficiary died after the insured, but before the claim was made. And, it would only go to the beneficiary's beneficiaries IF the per stirpes election was made when naming the beneficiaries.
As others have said, that's why it's a good idea to be thorough. Don't name your only 2 year old A) without naming a custodian, and B) without assuming this will be your only child ever and that you'll remember to change it again when child 2 and 3 come along...with wife 2 and wife 3...

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Flower 5 months ago

They go to the next listed beneficiary or the heirs of the deceased beneficiary.

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Rick 5 months ago

That's why insurance companies ask for a secondary beneficiary,

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Eva 5 months ago

Goes to the contingent (secondary) beneficiary. If one was not named, the proceeds go to the deceased's estate.

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Art 5 months ago

Held in escrow until the estate is settled. It becomes part of the estate.

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Casey Y 5 months ago

If a beneficiary predeceases an insured, the beneficiary if void. If there was not a designated contingent beneficiary, then the proceeds of the policy would go to the estate of the deceased.

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Lou C. Ferr 5 months ago

The owner of the policy would just change beneficiaries.

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Kieth 5 months ago

A new beneficiary can be chosen.

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StephenWeinstein 5 months ago

If there is another beneficiary or a contingent beneficiary, then that person gets the money.
If there are no living beneficiaries, then it becomes part of the estate of the deceased owner and is distributed according to the will or state law, like anything else that the person owned.

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Billy 5 months ago

It goes to the beneficiary's estate. That's different than if an heir in a will dies before the decedent. If a life insurance beneficiary dies, the funds generally become part of that beneficiary's estate rather than get distributed to the insured's estate.
John has a life insurance policy that will pay Jane $100,000 in the event of his death. Jane dies, but John never changes his policy. Then John dies. That $100,000 will go to Jane's estate, not back to John's. Had it been a will, it would be the other way around, but with insurance, the beneficiary's estate is the one that receives, so Jane's, not John's.

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Kevin 5 months ago

Contingent beneficiaries are sometimes designated. Since the policyholder is alive, and assumed to be competent, a new beneficiary would be named. Otherwise, the proceeds could go to the estate of the named beneficiary, depending on state laws.

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Logan 5 months ago

if not changed it goes to beneficiary's beneficiaries

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A Hunch 5 months ago

It depends if contingent beneficiaries are named. If they are, those individuals receive the money. If not, it goes to the beneficiaries heirs.

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