Many life insurance policies have beneficiaries that will gain the benefits after the insured has passed on. This part is generally understood well, as that is the primary reason that a life insurance policy is generally taken out. However, there have been situations where a beneficiary is not named properly, or there have been problems that come up that cause it to get a bit murky.
Depending on the state of the policy and which state the policy holder lived in, there can be many different resolutions to an unnamed or improperly named beneficiary.
How does it come to this?
Many don’t understand how a policy cannot have a beneficiary named, as it seems that would be the primary reason to have life insurance in the first place. However, there are multiple reasons that there may be no beneficiary listed on the policy.
For one, an unlisted beneficiary can come from an unexpected death of the beneficiary themselves. The policy is generally made with the idea that the beneficiary will outlive the insured individual. However, in cases where the beneficiary passes away before the policyholder, and the policy is never updated, it can cause massive problems.
Another situation that can occur is when the insured deliberately leaves off a beneficiary. Generally, this results in cases where the insured intends for the insurance to go towards paying back their last bills and debts. Because of this, no person would be a direct recipient.
What happens to the benefits?
The results of the policy tend to differ depending on what state you live in. Different states have different methods and procedures when attempting to put the money away. Most will follow the will and policy to the letter if the beneficiary is directly listed as the estate, while others will allow the next closest of kin to take it, as defined by the state’s statutes.
For the money to go directly to the next of kin, the policy beneficiary will generally have to have passed away recently, before the policy holder does. In this instance, it is not really a problem of “No Beneficiary Listed”, but more “No Beneficiary Available”. In these situations, most states will forfeit the policy funds into the estate of the deceased, which will be used to help pay off the old debts and other such debts left over.
For the money to go to a next of kin that is related to the deceased, the next of kin must have a close blood relation to the recently deceased. This is usually a family member, such as a sister or brother, or a parent. They must be extremely close, not just a close friend of sorts. Many people list it as an heir-in-law, or those that are recognized as someone that could legitimately succeed the deceased.
Lastly, for those policies that list the beneficiary as their estates, the money is not able to be touched by those even closest to the recently deceased. With many policies, this is a set in stone system that cannot be changed. As such, some find it more convenient than letting the money be fought over by spouses or close relatives.
If you have a delayed or denied life insurance claim, our life insurance attorneys will recover the full amount of the policy.