What Happens to Life Insurance with No Beneficiary?

Learn from the nation’s top life insurance lawyers where death benefits go when there is no life insurance beneficiary or the beneficiary predeceases the policyholder.

If you are an heir of a policyholder who did not list you as a beneficiary, we may be able to help you. Call us for your free, no-obligation consultation.

What a Life Insurance Beneficiary Is

A life insurance beneficiary is a person or entity named by the policyholder to receive the death benefit if the policyholder dies within the policy term.

A policyholder may name an individual, a business, a trust, or a non-profit as a beneficiary. Usually the beneficiary must be identified by full legal name, residential address or place of business, and social security number or tax identification number.

Why Designating a Life Insurance Beneficiary is Important

If a policyholder fails to list a beneficiary or fails to keep their beneficiary designation up to date, the death benefits will not go to the person or entity they intended.

If a policyholder is going to the expense and trouble of purchasing life insurance, they must take care to name a primary beneficiary as well as secondary or contingent beneficiaries in order to ensure their intent is realized upon their death. A policyholder should also update their beneficiary designations if they marry, divorce, their relationships change, or if any of their beneficiaries die.

What Happens if a Life Insurance Policy Doesn’t List a Beneficiary

Although it might seem unusual, as the entire purpose of having life insurance is to make sure loved ones receive the death benefit, sometimes a policy does not list a beneficiary. This can happen when the policy is very new, the beneficiary designation is in the process of being changed, or the policyholder attempts to change or partially completes the change of beneficiary and suddenly dies.

If the policy does not list a beneficiary, the death benefits will pay to the policyholder’s estate. An “estate” is the sum of all of the policyholder’s assets upon their death and is administered by an executor.

Why You Don’t Want You Death Benefit to Go to Your Estate

If a life insurance policy pays to the policyholder’s estate, the death benefits will be subject to the claims of the policyholder’s creditors. Those creditors may include medical professionals and hospitals or hospice for end-of-life medical expenses, credit cards, and other personal debt of the policyholder.

The executor must pay these bills before the policyholder’s heirs receive any inheritance from the estate. The policyholder’s heirs will therefore inherit less money than they would have if the policyholder had named them as life insurance beneficiaries.

Who Receives Payment if a Beneficiary Dies Before the Policy Holder

If the primary beneficiary dies before the policyholder, the secondary or contingent beneficiary or beneficiaries receive the death benefit. If the policyholder failed to name secondary or contingent beneficiaries, or the secondary or contingent beneficiaries also died before the policyholder, the life insurance company pays the death benefit to the policyholder’s estate.

Talk with an Experienced Life Insurance Lawyer Today

Life insurance payout can get complicated when there is no beneficiary. If your loved one died, had life insurance, and there is no life insurance beneficiary or the beneficiary designation is unclear, talk with the life insurance lawyers at Boonswang Law to discuss your case. We’ve helped thousands of clients get the payout their loved ones intended, and we can help you too.

Written By: Chad Boonswang
Chad G. Boonswang, Esquire is a litigation lawyer based in Philadelphia, PA. Selected as an ASLA 2014, 2015, 2016, 2017 and 2018 Top 100 Litigation Lawyer, Mr. Boonswang plays to win. As a lawyer, athlete, and scholar, he has always put in the energy, time, and commitment to be the best. After working for several prominent law firms in Philadelphia, including Montgomery McCracken Walker & Rhoads LLP, he founded his own practice in 2002.  Since then Chad has recovered tens of millions of dollars on behalf of his clients from life insurance claims and catastrophic injury cases.  Year after year, he has earned a 10.00 Superb rating on Avvo.

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