Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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When Someone Dies Who Owns Life Insurance PolicyWhen someone dies, it is the beneficiary listed on the policy that owns it. Typically, a life insurance policy lists two beneficiaries, a primary and a secondary beneficiary.

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This is important because there are times the primary beneficiary passes away and if a secondary beneficiary isn’t listed then the policy benefit doesn’t get paid to anyone.


The policy owner can add as many secondary beneficiaries that they want to their policy; however, the insurance company will pay out in order of beneficiaries, primary first, then the first secondary, the second one and so on.

By law, secondary beneficiaries cannot contest the insurance policy as they can with a will. The insurance company will only pay the primary beneficiary or the secondary beneficiaries in order in case of other deaths.

  • Exception- If the policy owner was elderly and they recently changed their policy beneficiary before their death, the benefit can be contested if it can be proven that the policy owner was not of sound mind. This is the only exception; however, it is very costly to contest an insurance policy and the onus is upon you (or the contester) to prove that the person was not of sound mind when they changed their will, which is very difficult to do.

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How to Collect a Life Insurance Benefit

Once someone dies, you may not be thinking about how much money you can get from his or her death; however, it’s important that you claim the benefit as soon as possible. The reason for this is that the process takes a couple of weeks and you don’t want to wait until the time comes that you actually need the money for bills. This is especially true if the person who dies provided for you and/or your family financially.

Steps to take after a death:

  • Informing people of the death is the first thing that you need to do. You need to inform the deceased person’s place of business, if applicable, friends, family and the insurance company.
  • Provide the insurance company with a copy of the death certificate, which can be ordered from your department of records or the vital statistics office. Where this is located varies from state to state.
  • Find the insurance policy. If you can’t find the insurance policy, don’t stress, as long as you know where the life insurance policy was purchased from everything is fine.

Once you have provided the insurance company with the death certificate, they can verify the deceased against an existing policy. This may take a little longer, but only a few hours or possibly a day, not weeks or months.

In addition to sending the death certificate, you need to find out what else the insurance company requires from you. This process varies from company to company, but in most cases, an adjustor will visit you and ask you some questions about the deceased. This is completely normal and if the adjustor is satisfied then you should get your lump sum payment in as little as two weeks.

The insurance company pays the benefit in the majority of cases, so don’t stress about this part of the process. This is the insurance company’s way of ensuring that insurance fraud isn’t occurring.

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Finding the Value of a Policy and Your Tax Burden

You may also be wondering just how much you are going to get from the policy, as the beneficiary. If you have the paperwork purchased by the insured, then all you have to do is read through it. The value of the policy upon the insured person’s death will be written on the policy.

If you can’t find the paperwork, then you will need to call the company from where the policy was purchased. They will not share this information with just anyone, you will have to provide proof of death, (as mentioned before), and prove that you are the beneficiary of the policy.

The insurance company may require a visit in person in order to verify your identity, so if they are in another state, you may have to wait for this information. A large insurance company may have offices in every state, which will make it easier for you to take this step.

Fortunately, there are no federal or state taxes applied to the benefits paid to a beneficiary. If, however, you are named in a will and the insurance policy’s beneficiary was the estate rather than a specific person, then the money will be subject to estate taxes.

Some people think that they are doing their family a favor by assigning the estate as the insurance beneficiary because they can distribute the money to multiple people via a will. The truth is, however, with up to 40% in estate taxes, this can create quite a tax burden on the recipients.

This information is current at the time of this article posting, however, laws are changing constantly and there has been some discussion by the US senate in regards to taxing life insurance beneficiaries. It is up to you to determine whether or not you owe any taxes; this is not something that you want to overlook as your penalties for not paying owed taxes can be staggering.

If you aren’t sure, you can call any insurance company and ask them for information regarding life insurance beneficiary taxes. They will provide this information to you free. You can also check insurance websites for this information; just make sure the source you use is a reliable one.

Buying Your Own Life Insurance Policy

Now that you understand a bit more about who benefits from a life insurance policy and why, you may be considering your own mortality and what you are going to leave behind for your family. No matter how old you are, it is never too late to purchase a life insurance policy. However, it does get more expensive as you age.

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There are two different types of policies to choose from, whole life and term life insurance. What you choose depends on your specific situation and what you want your policy to offer. A whole life policy offers cash value after a few years and will be valid for as long as you live and are paying your premiums. A term policy is valid for a set number of years.

A whole life policy is more expensive, but offers a long-term benefit while a term life policy is less expensive while offering more coverage, but for a limited time. You will need to determine for yourself what option meets you and your families needs.

Regardless, you will want to get the best rate possible and you can only do this if you shop around. Our free quote tool can take a lot of the time and effort out of this process by allowing you to do this in a single place.

Once you have answered a series of questions, you will receive quotes from multiple companies that you can compare side by side. You can change the criteria between whole and term life insurance so that you can see what each type of coverage will cost you. Give it a try today, it’s free and you are under no obligation to buy so click on the link now!

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