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Life insurance is an excellent start towards securing your beneficiary’s future with life insurance benefits. To do so, a policyholder must keep their documents updated. This avoids any fallout, payment delays, or even claim denials.
The policyholder must also comply with the requirements of their life insurance policy. This ensures that their primary beneficiaries are eligible to receive life insurance proceeds upon their death.
Suppose a primary beneficiary is not eligible to receive any life insurance death benefit from the life insurance company. In that case, the insurance firm will automatically give the payout to the secondary beneficiary.
Contingent beneficiaries are a backup plan for a policyholder to receive life insurance proceeds if the primary beneficiary dies. However, it is not only the death of the primary beneficiary that results in the contingent beneficiary receiving life insurance benefits.
A primary beneficiary can refuse the death benefit of a policyholder. On the other hand, an insurance company might process death benefits to the contingent beneficiary if the insurance firm can not track down the primary beneficiaries.
You can even name minor children as your contingent beneficiary. This is to protect them in case of your unexpected death financially. For that, you would need to appoint a legal guardian. The guardian will manage the payout until the minor reaches the legal age, 18 or 21, depending on your state.
There are cases where individuals forget naming beneficiaries when purchasing a life insurance policy. In such cases, upon the policyholder’s death, the death benefit becomes part of the estate.
An estate is what you would call all the property, assets, money, possessions, investments, and even belongings. When a death benefit becomes part of an estate, it is subject to fees and taxation. A few factors may impact your estate. These include location as state laws differ, any debt you have left behind, your will, and more.
Once a death benefit becomes part of the estate, the probate process starts, where the probate court oversees your estate. This is time-consuming before any of your heirs can receive a payout.
Your heirs may receive a very small amount of the estate due to taxes; therefore, naming beneficiaries or having an estate planner for proper estate planning has more advantages than you would think.
The state will take over your estate and personal belongings if the policyholder has no living heir. It is best to speak to a lawyer about life insurance and estate planning to determine your options and choose the best solution for your beneficiaries.
Life insurance companies require policyholders to complete the beneficiary designation form accurately and to review the form now and then to ensure any changes to the beneficiary designations.
Life insurance differs from any other type of insurance as the death benefits pass to the designated family members. Many policyholders forget where the life insurance proceeds will go if the primary beneficiary dies. A policyholder should always complete the form and read the insurance policy. The designation form requires information on primary and contingent beneficiaries. However, most policyholders do not mention contingent beneficiaries.
Suppose the primary beneficiary dies, and contingent beneficiaries are not mentioned on the designation form. In that case, the death benefits automatically get sent to your estate, which may take a lot of time.
It is always better to keep your beneficiary list up to date and name more than one beneficiary, such as contingency beneficiary, secondary beneficiary, and tertiary beneficiary.
Having multiple beneficiaries is the best way to ensure your life insurance benefits reach the relevant family members in case the primary designated beneficiary dies.
Remember that most life insurance companies need to verify the beneficiary’s identity before they can process death claims.
Several situations where an insurance company refuses to pay life insurance beneficiaries. If the information on the designation form is inaccurate, an insurance company may decide to refuse any claims.
Not only that, but if any life changes occur in the life of a primary beneficiary and are not in the form, insurance companies have a reason to refuse the claim since the designation form is not up to date.
There are insurance policies that cover death by murder. If a primary beneficiary kills the policyholder or is an accomplice to the murder, they will receive the life insurance benefits of the policyholder.
However, not all insurance policies cover death by murder; in that case, the primary beneficiary will not receive any payouts if they were an accomplice to the murder or have done the killing themselves.
There are several reasons an insurance provider may decide to refuse life insurance claims to the beneficiary.
If you’re having trouble with the insurance company or facing claims refusal, contact us at (213) 596-9642 and get a free consultation today!
Ehline Law has a lot of experience dealing with claims and insurance companies and has had over 3,000 success stories. We understand that insurance companies work in their best interests, so our expert lawyers protect our clients no matter the legal challenge.
We’ve won the “Superlawyers Rising Star Award,” “Best Trial Lawyers Award,” and many more achievements, further strengthening our image as the best lawyers to work with.
Contact our Los Angeles personal injury lawyers if you feel that the claim refusal had no solid reasoning, and our lawyers will help file a complaint to start the legal process. Speak to us now at (213) 596-9642 and get a free consultation today!
Michael is a managing partner at the nationwide Ehline Law Firm, Personal Injury Attorneys, APLC. He’s an inactive Marine and became a lawyer in the California State Bar Law Office Study Program, later receiving his J.D. from UWLA School of Law. Michael has won some of the world’s largest motorcycle accident settlements.