Life Insurance Beneficiary Died Before the Insured: Who Gets the Money in Ontario?
If the named beneficiary died before the insured, the money goes first to a contingent beneficiary if the policy names one. If the contract or a declaration does not say who takes the share, it goes to the surviving beneficiaries equally, and if none survive it goes to the insured's estate.
Once the money is payable to the estate, it becomes part of the estate and is dealt with under the will or the intestacy rules, together with estate debts. The creditor shield applies only where a beneficiary is designated, and estate administration tax is charged on the value of the estate when probate is issued. Naming your "heirs", "next of kin" or "estate" counts as naming the personal representative, so the money is paid to the estate.
A beneficiary designation in a will has no effect against a designation made later than the will. If a minor ends up entitled and no one can give a valid discharge, the insurer must pay the money into court to the minor's credit, unless it instead pays the minor's guardian of property appointed under the Children's Law Reform Act. The policy wording and the facts decide the result, so a lawyer can confirm your situation.
Key takeaways
- A contingent beneficiary named in the policy takes the share first, and if none is named the surviving beneficiaries share it equally.
- If no beneficiary survives, the money goes to the insured or the estate, where it is dealt with under the will or intestacy rules and estate debts.
- Naming your heirs, next of kin or estate as beneficiary is treated as naming your personal representative, so the money is paid to the estate.
- A surviving beneficiary can enforce payment in their own name, and a dependant support order can still reach insurance that has a designated beneficiary.