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Life Insurance Plan without Beneficiary: Who Gets the Payout Amount?

02-08-2022 |

A life insurance policy plan is designated to secure your family's financial needs in case of your unexpected death at any time during the policy tenure. It can help them pay for your debts, plan for your children's future financial commitments or any other obligations you are responsible for accomplishing in the future.

 

However, the benefits should reach the right hands to satisfy the financial needs best. What happens to the life insurance payout amount if the plans do not have a beneficiary? How can such a situation arise, and what are the effective solutions? Let us discuss it here.

 

What is a Beneficiary in Life Insurance Policy In India?


A beneficiary in the life insurance policy plan is an organisation or individual who can receive the death benefit in case of an unfortunate death of the life assured. You can choose the beneficiary during policy inception. The beneficiary can be your spouse, children, any other relative, business partner or trust subject to the terms and conditions of your life insurance policy plan. No beneficiary on life insurance can be a rare scenario but procedures therein cannot be avoided. 

 


What Happens to Life Insurance Without Beneficiaries?


Your insurer will provide the financial benefits to your beneficiaries as per the life insurance agreement after your unexpected death. But, what happens if there is no beneficiary on a life insurance policy.

Here are a few circumstances that can lead to such situations.

  1. The beneficiary dies before the policyholder.
  2. The policyholder and the beneficiary die at the same time.
  3. The beneficiary dies before the life insurance policy plan's death claim is processed and paid by the insurer.

Let us consider these individual scenarios and understand the procedures followed in a life insurance policy without a beneficiary.


The beneficiary dies before the policyholder.

When you purchase a life insurance policy plan, your insurer will ask you to provide the details of your beneficiaries to pay the life insurance proceeds in case of your unexpected death. For example, you can provide a primary and a secondary beneficiary based on the terms and conditions of the life insurance policy plan.

 

If the primary beneficiary is unavailable, found missing or dies along with the policyholder, the secondary beneficiary can receive the benefits. If the secondary beneficiary is unavailable, or the primary beneficiary dies, and no secondary beneficiary is assigned, the life insurance policy plan is regarded as life insurance without beneficiaries. The relevant officials will designate the benefits as the deceased's estate in such scenarios. It means the benefits will be distributed to the family members based on the policyholder's last will. If there is no such valid will, it will be based on the stated law. 


 

The policyholder and the beneficiary die at the same time.


There can be a situation wherein the policyholder and the beneficiary die at the same time or within a span of 24 hours from each other's death. Based on who dies first, the death payout will be provided by the insurer to the dependent beneficiary or regarded as the beneficiary's estate or the policyholder's estate.

 

Let us consider the individual scenarios of life insurance without a beneficiary.

 

  1. In an accident, if the beneficiary survived a few minutes after the policyholder's death, the benefit will be designated as the beneficiary's estate. It will be payable to the legal heirs based on the prevailing laws in the country.
  2. If the beneficiary dies before the policyholder, the benefits are paid to a dependent beneficiary mentioned in the life insurance policy plan.
  3. If the dependent beneficiary isn't available, the relevant officials will designate it as the policyholder's estate and transfer the proceeds to the legal heirs.
  4. If there is no proof of evidence stating who dies first, it will be presumed by the relevant officials that the policyholder survived the beneficiary. And the proceeds will be provided to the dependent beneficiary or regarded as the policyholder's estate and transferred to the legal heirs.
 

The beneficiary dies before the life insurance policy plan's death claim is processed and paid by the insurer.


There is a possible situation wherein the beneficiary dies after the death claim is registered and before it is verified, approved and paid. In such cases, the death payout is designated as the beneficiary's estate and processed accordingly.

Even if the policy had a dependent beneficiary mentioned, the benefits would go to the primary beneficiary's family because the primary beneficiary survived during the policyholder's death.

At Tata AIA, we have a well-defined policy document detailing the payout benefits and the procedures to ensure the benefits reach your beneficiaries on time. Therefore, while purchasing our Tata AIA life insurance plan, you can access our features online, speak to our customer service executive team regarding the policy procedures and make well-informed decisions. In addition, you can calculate the premium using the online premium calculator and decide on the life insurance policy plan based on your affordability and financial requirements.


Conclusion

Life insurance benefits should reach the right beneficiaries to accomplish the necessary financial objectives. The life insurance policy in India has stated the specific rules and regulations in agreement with the insurers to decide on the payout benefits and its process. Therefore, it is important to be aware of such policy terms and procedures to best use the financial benefits.

 

Mention the list of beneficiaries and their details to help the insurers process the death claim without any disagreements in the event of your unexpected death. Choose the right life insurance policy plan in India, designate the right beneficiaries and leave a blissful legacy!

 

L&C/Advt/2022/Jul/1761

 

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Looking to get a new plan? 

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+91

TATA AIA Life Insurance Co. Ltd will send you updates on your policy, new products & services, insurance solutions or related information. Select here to opt-in.

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA), Tata AIA Life Insurance is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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