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What happens to life insurance with no beneficiary?

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Payal Waqif

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Insurance is normally taken to protect someone from future crises like loss, damages, death or illness. There are various types of insurance policies that can be purchased according to the needs of people. One of those is life insurance. It is the type of insurance policy which is normally taken by people when they want to protect their families from future contingencies. If a person has life insurance, his/her family members may not have any financial problems after his/her death.

A beneficiary is a person who is going to get the benefit of the life insurance policy after the death of a person. A person purchasing life insurance has the option to choose or not to choose any beneficiary. Either beneficiary's name will be mentioned, or he/she fulfills the condition that makes them eligible to get benefit from the policy. A minor can also be a beneficiary. If he is not of 18 years or more than that at the time of receiving the benefit, the guardian must manage the funds until the minor attains that age.  Moreover, the amount of money that a beneficiary get will be considered a tax-free benefit that is he/she does not have to pay a single amount of tax to the government for that amount, and it is a great advantage for him. Usually while buying a life insurance policy, an individual can add two types of the beneficiary;

  • Primary beneficiary:
    They are the type of beneficiary who will be the first one to receive any advantage after the death of the person. A person purchasing a life insurance policy can name more than one primary beneficiary. They can be sons, daughters, friends, cousins, etc. Normally the person upon whom the insuree has absolute faith and confidence that he/she will not misuse it.
  • Contingent beneficiary:
     As the name suggests itself that they are the type of beneficiary which is given benefit in extreme contingencies. They are also known as the secondary beneficiary. They will receive benefit/advantage from the life insurance policy of the insuree only if the primary beneficiary is deceased, refuses to accept money at the time of receiving the funds or is not able to locate. If there is a primary beneficiary, no benefit will be given to them. 

No one in this world can predict what is going to happen in the future. If a person has only a primary beneficiary, the amount of money after his/her death will be transferred to the person. If a person has both primary and contingent beneficiary, the amount can be transferred to either of them depending upon the case. And if there is no beneficiary mentioned in the insurance policy form, the whole amount of money will be transferred to the estate. Hence, the beneficiary should be mentioned in the insurance policy.

Read more:  What is supplemental life insurance?


Sidharth Kumar


Life insurance policies are the common means to avoid a sudden financial crisis for which almost all the people of the world feel it be a must-have or necessary document. Any life insurance is a term of the contract between the two parties; one is the insured, i.e., the one who is claiming the insurance, and the other is the insurer, i.e., the company or the individual who is providing the insurance. An insured person always goes for insurance, where he has the provision to mention a beneficiary's name. A life insurance beneficiary can be anybody whom the insured wants to claim the insurance amount after his death. A beneficiary can be someone’s wife, children, parents, or anyone mentioned by the insured. But many times, it has been found that there are lots of life insurance policies where the name of the beneficiary has not been mentioned, and the insured has died with no beneficiary. Now the question is, what happens to those life insurance?

Life insurance policies highly follow the terms and clauses made by the insured's respective states who have made it. Thus, different states have their respective rules for insurance policies with no beneficiary. As insurance is being created, it requires the insured to update and check the policy from time to time. When the policyholder fails to do that, the insurance company realizes a problem with the presence. In such cases, the company tries to contact the insured first, and if they feel unable to do that, they go for the beneficiary. If somehow the insured dies with no beneficiary, then the amount of money is kept for a certain time as a span to wait for the insured to contact. The laws of the state declare this span of time. After this, if nobody contacts, then it is claimed by the state itself.

Again, in some cases, the money is transferred automatically to the next kin of the policyholder. This rule is the most common one when it comes to life insurances. Thus, if somehow you fail to mention the name of the beneficiary, then it is not a big deal.

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