What can I do about a life insurance payout going to an estate?

Seeking Advice
1

My parents took out a $5,000 life insurance policy on my brother over 30 years ago. My mother was the primary beneficiary, and my father was secondary. When my mom passed away, my father made me the secondary owner of the policy. After he passed a few years later, I informed the insurance company, and they started sending the yearly bill to me. I’ve been paying for the policy for five years.

My brother passed away last month, and I’ve just learned that there are no living beneficiaries on the policy. The insurance company told me the payout would now go to my brother’s estate. I didn’t realize this when he passed, so I’ve already covered his cremation costs myself and am considering additional expenses for a cemetery plot. To complicate things, my brother has an estranged child who the insurance company says I need to notify. This child was not in his life, and the policy was always meant to cover final expenses.

I doubt the child will willingly give me the money for these costs, especially since my brother wasn’t involved in their life. Do I have any recourse here? I’m just trying to fulfill my parents’ wishes and cover the necessary expenses, but I’m now out-of-pocket for everything.

TLDR: I’ve been paying for a life insurance policy that will now go to my brother’s estate because there were no updated beneficiaries. What can I do?

2

Unfortunately, without a named beneficiary, the payout automatically goes to the estate. If your brother didn’t have a will, the estate typically goes to the next of kin—in this case, his child.

3

The insurance company should have advised you to update the beneficiaries, but many don’t follow up with policyholders unless prompted. Without a designated beneficiary, the payout going to the estate is standard. It’s an unfortunate situation, especially since the policy was meant for final expenses.

4

You might want to consult an attorney to see if you can file a claim against the estate for reimbursement of the funeral expenses. Since the insurance payout is going to the estate, that might be your best bet.

5

@Sky
Thanks for the suggestion. I didn’t think about going that route, but it makes sense.

6

Always check and update beneficiaries on any policy you’re responsible for. Unfortunately, this is a tough lesson learned, but it’s a reminder for others in similar situations. It’s worth consulting an attorney to understand your options, especially if you’ve already paid for the funeral expenses.