Common Life Insurance Payment Issues And What To Do About Them

14 September 2015 by Jonathan Phillips

Most life insurance policies pay benefits to the beneficiary designated on the policy when the insured party dies. For this to happen the way that it's intended, the beneficiary must be clearly listed, easy to identify, reachable and still alive following the insured person's death. Here are a few scenarios when that may not be the case, and what you should do if a loved one's life insurance is tied up in a situation like this.

When the Beneficiary Cannot be Found

If the beneficiary of the policy cannot be located or has passed away, the policy payment is issued to the insured's estate. In some states, this will automatically make those funds a legal part of the estate and handle them according to the terms of the will. If there's a will in place and it designates a family member, friend or other individual to take the estate, the life insurance payout will simply be part of that distribution.

Sometimes, there's no will in place. If this is the case, the life insurance payment will fall into the probate court. If that happens, any family member who has reason to believe that he or she has a right to the money can file a claim with the court and then present their case. Before you chose this route, though, talk with a probate attorney to help you create a compelling case.

When the Beneficiary Dies Before Payment is Processed

If the beneficiary is alive and identified following the insured person's death, the policy payment will be awarded to him or her. In the event that the beneficiary passes away before receiving that payment, the payment will then be paid to the beneficiary's estate. Once that person has been located and determined eligible for the funds, the policy benefit belongs to him or her – even if it means putting it into the estate.

When the Beneficiary Dies with the Insured

It is presumed that if a policy beneficiary passes away before the policy holder, the insured will have time to change their life insurance policy. If, on the other hand, they pass away together in an accident or other event, there is no opportunity to make that change. In those cases, the court system will make the determination about who receives the funds, and they are typically awarded to the next of kin or the will on file for the insured party. You'd have to show evidence of being the insured's next of kin or be named on the will as the beneficiary to claim the funds.

How to Claim Life Insurance Benefits

If you have any reason to believe that you're entitled to the payout of a life insurance policy, you'll have to prove your identity as well as show documentation that you are, in fact, the beneficiary on the policy or the next of kin. File your claim with the insurance company along with the details of the policy and reach out to a probate attorney, like O'Connor, Mikita & Davidson, for support if you have to take the claim to court.

 

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