What Happens to Life Insurance Proceeds if the Primary Beneficiary Dies Before the Insured?

Dec 4, 2018 | Blog |

If you’re a life insurance beneficiary — primary, secondary, or tertiary — then you may be wondering how proceeds will be distributed if one of the other beneficiaries has died before the insured.  When a primary beneficiary die before the insured, this can cause a significant shift in the distribution of proceeds and may impact the claims that various beneficiaries have to the death benefit.

Let’s explore.

Unclaimed Proceeds are Paid to the Estate

Suppose that the life insurance policy listed only a single, primary beneficiary, and that beneficiary died before the insured, or perhaps simultaneously — for example, the insured and the primary beneficiary may have died while traveling on the same recreational boating excursion together.

What happens to the life insurance proceeds under such circumstances?

Well, without a listed beneficiary to claim the death benefit, the life insurance proceeds will be paid out to the estate of the deceased insured.  Simply put, the proceeds will be subsumed into the probate assets of the estate and will thereafter be probated and distributed in accordance with the applicable estate planning documents.

Let’s consider an example where you are not a listed life insurance beneficiary, but you are one of the two beneficiaries to the estate (i.e., you are designated to receive 50 percent of the total estate assets).  Suppose that the primary life insurance beneficiary in an accident alongside the insured.  The death benefit proceeds will be paid out to the estate and will then be incorporated into the total estate assets, of which 50 percent will go to you.  Through this roundabout payout process, you will receive 50 percent of the life insurance proceeds.

Contingency Beneficiaries

Generally speaking, the insured lists out multiple beneficiaries — secondary and tertiary beneficiaries to receive the death benefit proceeds in the event that the primary life insurance beneficiary dies before the insured (or simultaneously).  These are known as contingency beneficiaries.

Contingency beneficiaries do not get paid out if there is still a remaining beneficiary in the tier above them.  For example, if there are two primary beneficiaries, and one of the primary beneficiaries dies before the insured, then the proceeds will not be split between the surviving primary beneficiary and the contingency beneficiaries — instead, all the proceeds will go to the surviving primary beneficiary.  Only if all the beneficiaries on a single tier die before the insured (or simultaneously to the insured) will the proceeds go to the contingency beneficiaries in the tier below.

Contact an Experienced Chicago Life Insurance Attorney for Guidance

Here at the Bryant Legal Group, P.C., our attorneys have extensive experience representing the interests of life insurance beneficiaries who find themselves embroiled in challenging disputes with other beneficiaries, or even with the estate of the deceased.

We are highly-committed to client-centered advocacy.  Unlike many of our competitors, we believe that the attorney-client relationship is best described as a partnership — as such, we work closely with clients to ensure that there are open lines of communication.  We want our clients to be fully informed of case developments and to outline their goals, concerns, and preferences.  This gives us the ability to represent clients more decisively.

Interested in speaking with an attorney about your life insurance claims?  Call (312) 313-6179 or submit an online case evaluation form to request an appointment with an experienced Chicago life insurance attorney at Bryant Legal Group, P.C.

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