What Happens If Your Beneficiary Dies Before You?
When a beneficiary dies before the policy owner, the life insurance beneficiary rules state that the death benefit would be paid to a contingent beneficiary. If no contingent beneficiary is named, the benefit would be paid to the policy owner’s estate.
It is important to regularly review and update your life insurance beneficiary designations to ensure your wishes are carried out.
Naming A Secondary Or Contingent Beneficiary
If your designated beneficiary dies before you, it could cause confusion and unexpected consequences. To avoid such difficulties, most life insurance companies let you name a secondary or contingent beneficiary. This person will receive the benefits if the primary beneficiary dies before you or cannot be found. If you don’t name a secondary or contingent beneficiary, the benefits will be paid to your estate, creating added delays and costs.
Choosing A New Beneficiary
If your primary beneficiary dies before you and you haven’t named a secondary or contingent beneficiary, it’s important to act quickly to avoid further complications. You may be able to choose a new beneficiary or make changes to your policy, depending on the type of policy and the insurance company’s rules. However, you may need to provide evidence of the primary beneficiary’s death, such as a death certificate.
Proceeds Go To Your Estate
If you don’t name a secondary or contingent beneficiary and your primary beneficiary dies before you, the proceeds of your life insurance policy will go to your estate. This means that your loved ones won’t receive the money right away, and the settlement of your estate could take months or even years. Additionally, your estate could be subject to probate proceedings, which can be time-consuming and costly. To ensure your beneficiaries receive the benefits as quickly and easily as possible, it’s crucial to keep your designated beneficiaries up-to-date and to name secondary or contingent beneficiaries whenever possible.