Ehline Law Firm Personal Injury Attorneys, APLC / What Must Death Victims Know About Life Insurance Contingent Beneficiaries
Page Updated 12/08/2021
Life insurance is a great start towards securing your beneficiary’s future with life insurance benefits. To do so, a policyholder must keep their documents updated.
This is to avoid 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 for receiving life insurance proceeds upon your death.
If a primary beneficiary is not eligible to receive any life insurance death benefit from the life insurance company, then 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 simply 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 financially protect them in case of your unexpected death. For that, you would need to appoint a legal guardian. The guardian will be responsible for managing the payout until the minor reaches the legal age, 18 or 21 depending on the state you’re in.
There are cases where individuals forget naming beneficiaries at the time of purchasing the life insurance policy. In such cases, upon the death of the policyholder, 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. Few factors may impact your estate. These include location as state laws differ, any debt that 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 a time-consuming process before any of your heirs can receive a payout.
Your heirs may receive a very small amount of the estate due to taxes and therefore naming beneficiaries or having an estate planner for proper estate planning has more advantages than you would think.
If the policyholder does not have any living heir, then the state will take over your estate and personal belongings. It is best to speak to a lawyer about life insurance and estate planning to determine your options and choose the best possible 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 is different from any other type of insurance as the death benefits pass to the designated family members. What many policyholders forget to take into consideration is what if the primary beneficiary dies, where will the life insurance proceeds go?
A policyholder should always complete the form and read the insurance policy. The designation form requires information on both primary and contingent beneficiaries, however, most policyholders do not mention contingent beneficiaries.
If the primary beneficiary dies and there is no mention of contingent beneficiaries on the designation form, then 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.
Keep in mind that most life insurance companies would need to verify the identity of the beneficiary before they can process death claims.
There are several situations where an insurance company will simply refuse 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 and 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 and 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 over the years. We understand the insurance companies work in their best interests and this is why 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!
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