What Happens If You Don’t Name a Beneficiary in Your Life Insurance Policy?

Your life insurance proceeds do not transfer as part of your probate estate. It’s on you as the policyholder to maintain payments on the policy and to update the beneficiary designation forms if there are changes in your personal plans. Do not count on the insurance carrier to keep you informed about annual updates to these forms, for example.

You are responsible for filing a beneficiary designation on your life insurance policy so that the company can transfer those assets to your chosen beneficiary when you pass away.

In some cases, insurance companies will distribute the death benefit according to specific orders outlined in the policy, but this order can vary so you’ll want to read through your policy’s specifics. Your life insurance payout will automatically go to your spouse regardless of whether or not you name a beneficiary if you live in what’s known as a community property state.

This considers you and your spouse to be equal owners of all joint assets. These states are Arizona, California, Idaho, Nevada, Louisiana, Texas, New Mexico, Wisconsin and Washington. Elective community property laws apply in South Dakota, Alaska and Tennessee, meaning that married couples can choose to have equal ownership.

Life insurance is a great tool for passing on financial support to your family members, but it only works when the policy is current and when you’ve named the right beneficiaries.

If you choose to adhere to community property laws when you got married, your spouse will have to consent to beneficiaries named on your life insurance policy. For more information about how to use a life insurance policy as part of your overall estate planning, schedule a consultation with an estate planning attorney today.



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