Life insurance policy is straightforward: You pay for an insurance policy, and if you pass away while your policy is active, the death proceeds go to your named beneficiary. But what will happen if your beneficiary dies before you? These scenarios might be confusing.
If your beneficiary dies before you
You must update your policy as soon as possible and pick a new beneficiary if your life insurance policy beneficiary passes away before you do. If you don’t update your insurance policy, the proceedings will go to your estate, which is a collection of your possessions, belongings, property, and investments. Also, if you don’t have a will that specifies how your estate and assets will be distributed, the state will get involved, which can prolong the process.
What happens if one among the multiple primary beneficiaries you have dies?
If you have numerous primary beneficiaries and one dies, the policy proceeds would be divided among the remaining heirs or the deceased beneficiary’s dependents. Otherwise, it would fall to contingent beneficiaries.
What happens when both contingent and primary beneficiaries die?
The benefits will be disbursed to the insured individual’s estate if all beneficiaries have died. Still, it will pass through probate and be subject to procedures and charges determined by the court.