Who is entitled to the life insurance benefits?
My stepdad had my sister and I as beneficiaries on his life insurance. Our mother took ownership of his insurance policy when he was put in a nursing home. Our stepdad passed away this week and I wanted to know, since our mom has ownership of the policy, will the policy be paid out and will my sister and I still receive the money?
The first thing I think you should do is call the insurance company and confirm that you and your sister are still the beneficiaries. The owner of the policy controls those designations. If your mother assumed ownership, she might've changed the beneficiary to someone else, like maybe herself. I would like to assume she would have kept your stepdad's wishes, but family members can do funny things when under stress.
If she did make a change, then the proceeds will go to whomever she designated. If she didn't, then ask the carrier for a claim kit so you can expedite the payment to you and your sister.
I am sorry to hear about your loss.
One of the great things about Life Insurance is that it avoids probate, and regardless of what the will or anything else says, whatever is listed on the beneficiary form is where the money is going to go. The Supreme Court has heard many cases in regards to beneficiary forms and who gets what. They have ruled in favor of the beneficiary form many times over. If you and your sister are labeled as the beneficiaries, then you both are entitled to the proceeds, regardless of what anything else says in a will or trust. It also doesn't matter if your mom was labeled as the owner, the insurance proceeds are paid out to the beneficiaries only. As long as the beneficiaries had not been changed, you and your sister will receive the life insurance proceeds. Typically, the insurance company will require a death certificate before they will pay out any of the benefit.
Hope that helps.
Vincent Oldre, CFP®
Sorry for your loss. We settle a LOT of Estates and we know these are very difficult times for families. You and your sister should still receive the death benefit of the policy assuming no change of beneficiaries were made for any reason. The owner of the policy is of no consequence with regard to the payout.
Best of luck!
I'm sorry about your stepdad. Life insurance passes by contract. If you and your sister are named as beneficiaries on the policy, the money will go to you, regardless of who owned the policy at the time of the insured's death.