If you’re a life insurance beneficiary — primary, secondary, or tertiary — then you may be wondering how proceeds will be distributed if one of the other beneficiaries has died before the insured.  When a primary beneficiary die before the insured, this can cause a significant shift in the distribution of proceeds and may impact the claims that various beneficiaries have to the death benefit.

Let’s explore.

Unclaimed Proceeds are Paid to the Estate

Suppose that the life insurance policy listed only a single, primary beneficiary, and that beneficiary died before the insured, or perhaps simultaneously — for example, the insured and the primary beneficiary may have died while traveling on the same recreational boating excursion together.

What happens to the life insurance proceeds under such circumstances?

Well, without a listed beneficiary to claim the death benefit, the life insurance proceeds will be paid out to the estate of the deceased insured.  Simply put, the proceeds will be subsumed into the probate assets of the estate and will thereafter be probated and distributed in accordance with the applicable estate planning documents.

Let’s consider an example where you are not a listed life insurance beneficiary, but you are one of the two beneficiaries to the estate (i.e., you are designated to receive 50 percent of the total estate assets).  Suppose that the primary life insurance beneficiary in an accident alongside the insured.  The death benefit proceeds will be paid out to the estate and will then be incorporated into the total estate assets, of which 50 percent will go to you.  Through this roundabout payout process, you will receive 50 percent of the life insurance proceeds.

• Related Article: 5 FAQs About Private Disability Insurance Claims

Contingency Beneficiaries

Generally speaking, the insured lists out multiple beneficiaries — secondary and tertiary beneficiaries to receive the death benefit proceeds in the event that the primary life insurance beneficiary dies before the insured (or simultaneously).  These are known as contingency beneficiaries.

Contingency beneficiaries do not get paid out if there is still a remaining beneficiary in the tier above them.  For example, if there are two primary beneficiaries, and one of the primary beneficiaries dies before the insured, then the proceeds will not be split between the surviving primary beneficiary and the contingency beneficiaries — instead, all the proceeds will go to the surviving primary beneficiary.  Only if all the beneficiaries on a single tier die before the insured (or simultaneously to the insured) will the proceeds go to the contingency beneficiaries in the tier below.

 

Contact an Experienced Chicago Life Insurance Attorney for Guidance

Here at the Bryant Legal Group, P.C., our attorneys have extensive experience representing the interests of life insurance beneficiaries who find themselves embroiled in challenging disputes with other beneficiaries, or even with the estate of the deceased.

We are highly-committed to client-centered advocacy.  Unlike many of our competitors, we believe that the attorney-client relationship is best described as a partnership — as such, we work closely with clients to ensure that there are open lines of communication.  We want our clients to be fully informed of case developments and to outline their goals, concerns, and preferences.  This gives us the ability to represent clients more decisively.

Interested in speaking with an attorney about your life insurance claims?  Call (312) 313-6179 or submit an online case evaluation form to request an appointment with an experienced Chicago life insurance attorney at Bryant Legal Group, P.C.

In the context of life insurance, it’s not at all that uncommon for the beneficiaries to be in conflict with one another — after all, the benefits amounts may be significant, and there may be inconsistencies in the distribution of benefits that were not known to the beneficiary prior to the death of their loved one.  For example, the spouse of the deceased may be surprised to find that the first wife of the deceased was actually the beneficiary at time-of-death, and therefore has a legitimate entitlement to the benefits at-issue.  This can quite clearly give rise to a dispute.

If you’re involved in a life insurance beneficiary dispute in Illinois, we encourage you to get in touch with a qualified Chicago life insurance attorney who can provide comprehensive assistance at every stage of the dispute, from early negotiations to litigation.  Contact Bryant Legal Group, P.C. to speak to an attorney about your dispute.

So, what sort of beneficiary disputes are commonly encountered?  Consider the following.

Spousal Issues

Illinois does not automatically transition the primary beneficiary of a life insurance policy following divorce and remarriage.  If the insured gets remarried, it’s possible that they have forgotten to change the primary beneficiary of their life insurance policy to make it their current spouse.  Unless changed, the benefits will be paid out to the former spouse.

• Related Article: 5 FAQs About Private Disability Insurance Claims

Coerced Changes to Asset Distribution and Beneficiary Designation

If the insured was in a particularly vulnerable position and/or was not mentally competent in the lead up to their own death (i.e., struggling physically and psychologically in a nursing home), then they may make changes to their life insurance distributions at the behest of someone who has become close to them in the interim period, such as their caretaker.  In some cases, the caretaker may even convince the insured to name them as a beneficiary, entitling them to assets that would otherwise belong to the other beneficiaries.

Under such circumstances, it may be possible to challenge the legitimacy of the changes made (to add the caretaker or other individual/entity as a beneficiary, or to change the distributions) by claiming that the insured was being unduly influenced or even coerced into doing so.

 

Changes to Designated Beneficiary Were Not Properly Executed

There are strict procedural requirements necessary for changing life insurance beneficiaries, and a failure to properly execute such changes (from a procedural standpoint) may undermine the legitimacy of those changes.  Though courts generally prefer to stick to the life insurance documents themselves when interpreting the intent of the insured, critical extrinsic evidence of a conflicting intent (when mere procedural issues prevented a change in the beneficiary designation) may be introduced to allow for the reformation of the life insurance contract in accordance with basic equity principles.

Contributing to the Death of the Insured

In Illinois, the Slayer Statute prohibits beneficiaries who intentionally and unjustifiably caused the death of another (i.e., the insured) from receiving life insurance benefits that flow from that death.  This statute was expanded to include prohibitions against beneficiaries who were previously convicted of or found civilly liable for offenses against the elderly or the disabled.  For example, if a beneficiary was found civilly liable for neglecting or abusing a disabled person, then they would be prevented from recovering benefits that accrue due to that victim’s later death.

Contact an Experienced Chicago Life Insurance Attorney for Assistance

Here at the Bryant Legal Group, P.C., our attorneys have extensive experience advocating on behalf of life insurance beneficiaries involved in disputes with other beneficiaries, or with the estate of the deceased.

We understand the difficulties — emotional and financial — that can accompany the death of a loved one, and we therefore invest a great a deal of effort towards simplifying legal concepts and working closely with clients to ensure that they are fully informed of case developments as we move forward.  We see clients as valuable partners in litigation and believe that effective representation is that which is truly considerate of the client’s unique needs, preferences, and concerns.

Ready to learn more about how we can help you secure the life insurance benefits to which you’re rightfully entitled?  Call (312) 561-3010 today to schedule a consultation with an experienced Chicago life insurance attorney at Bryant Legal Group, P.C.