Life insurance pays the death benefit out to your beneficiaries when you pass away. However, policyholders sometimes pass away without beneficiaries for various reasons. This can delay paying out the death benefit, which may not be paid out according to the policyholder’s wishes. This article will explain how life insurance beneficiaries work, what happens if you pass away with no beneficiaries, and some tips to help ensure your beneficiaries get the death benefit payout when you pass away.
A life insurance beneficiary is the individual or organization who receives the death benefit payout if the policyholder passes away while their plan is in force. When you get life insurance, you generally have to name at least one beneficiary. However, you can name multiple beneficiaries and designate what portion of the death benefit you’d like each to receive.1
You can select individuals, qualifying charitable organizations, and certain trusts as life insurance beneficiaries. If you pass away, your beneficiaries must contact your insurer to file a claim to collect the death benefit.
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Most life insurance companies require you to name at least one beneficiary. If beneficiaries are not named, the life insurance proceeds will go to your estate. If you don’t have a will, your estate, including the death benefit, may need to go through probate court.2
Probate is the legal process where the court determines how your assets, including life insurance policies, are distributed if you have not specified your wishes. The probate process can take a few weeks or a few months if there are no beneficiaries named, since the court must analyze the rest of your estate plan.3 If you have no estate plan, the court may have to use your state’s intestacy laws. This means your wishes may not be met.
Probate can also be costly. Court fees and legal costs can reduce your death benefit payout. These problems can be exacerbated if you have multiple heirs since there may be legal disputes. It can also cause conflict among loved ones.
Here are a few situations where a beneficiary may not receive a life insurance payout:4
If a beneficiary passes away after you but before claiming the death benefit, they won’t receive a death benefit payout. Instead, the death benefit may be paid to a contingent beneficiary. If you haven’t named one, the payout will go to your estate and will likely have to go through the probate process.
If you and your beneficiary pass away at the same time, your death benefit will either be paid to your estate or your beneficiary’s estate, depending on whether your beneficiary lived a few minutes longer than you did. If it’s unclear who passed away first, the payout will either go to your contingent beneficiary or your estate.
If you have multiple primary beneficiaries, but one passes away before the death benefit is paid, your death benefit is divided among the remaining beneficiaries. If there are no surviving primary beneficiaries when you pass away, your contingent beneficiaries will get the payout.
If no primary beneficiary is listed, the death benefit goes to a contingent beneficiary. Otherwise, it goes to your estate and will likely have to go through the probate process.
Here are some tips to help ensure your death benefit avoids the probate process and gets paid out according to your wishes:
Naming multiple beneficiaries ensures that other beneficiaries will receive your death benefit if one of them passes away before you. How you want to split up your death benefit among beneficiaries is up to you.
Naming contingent beneficiaries can help ensure a loved one or organization you care about receives the death benefit. These are beneficiaries that can receive the death benefit if a primary beneficiary passes away or can’t receive the death benefit for another reason.
Life events can impact who you’d like to designate as beneficiaries. For example, if you get married and have a child, you may want to add your spouse to the policy. On the other hand, you may want to remove your former spouse from the policy if you get divorced. Review your policy and circumstances regularly to ensure your beneficiary designations are up to date.
Beneficiaries may not know you’ve named them in a life insurance policy or where to find critical policy-related information and documents. They must know this information to claim the death benefit.
Tell your beneficiaries they are on your policy and give them all important policy information, such as the policy number. Keep your documents somewhere safe, but make sure beneficiaries know how to retrieve them.
Insurers generally require you to name beneficiaries, but sometimes, there are instances where no beneficiaries are available. This can cause your life insurance policy to get stuck in the costly and lengthy probate process. Naming multiple beneficiaries, designating contingent beneficiaries, updating your policy regularly, and informing your beneficiaries of their status can prevent you from passing away without beneficiaries. Now that we’ve explained how to ensure your life insurance wishes are met, contact Aflac today to explore your options for helping protect your loved ones with life insurance.
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1 Insurance Information Institute – What is a Beneficiary? https://www.iii.org/article/what-beneficiary. Accessed May 18, 2023.
2 SmartAsset – What Happens to Life Insurance with No Beneficiary? Updated May 16, 2023. https://smartasset.com/insurance/what-happens-to-life-insurance-with-no-beneficiary. Accessed May 18, 2023.
3 The Balance – How Long Does Probate Take? Updated July 15, 2022. https://www.thebalancemoney.com/how-long-will-probate-take-3505270. Accessed May 18, 2023.
4 Policygenius – What Happens to Life Insurance with No Beneficiary? Updated June 20, 2022. https://www.policygenius.com/life-insurance/what-happens-when-your-life-insurance-beneficiary-dies-before-you/. Accessed May 18, 2023.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.
68000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400.65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000 series: In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series: Whole: In Arkansas, Delaware & Oregon, Policy Q60100M. In Idaho Policy Q60100MID. In Oklahoma, Policy Q60100MOK. In Texas, Policy Q60100MTX.Q60000 series: Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Oregon, Texas, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C.
Final Expense insurance coverage is underwritten by Tier One Insurance Company. In AR, AZ, ID, OK, OR, PA, TX and VA: Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22. In California, Tier One Insurance Company does business as Tier One Life Insurance Company (Tier One NAIC 92908).
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions.
Aflac’s family of insurers include Aflac, Aflac New York, Continental American Insurance Company, and Tier One Insurance Company.
Aflac WWHQ | Tier One Insurance Company | 1932 Wynnton Road | Columbus, GA 31999.
Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211