What Happens to a Deceased Person's Life Insurance Payout in Ontario if There Is No Named Beneficiary?

It depends on the policy wording and who, if anyone, is validly designated, so check the policy and the insurer's records before assuming the money goes to the estate. Where a beneficiary is designated, the insurance money is not part of the insured's estate and cannot be claimed by the insured's creditors from the time of death.

That protection applies only where a beneficiary is designated. If the insured named themselves or their personal representative, the proceeds are paid into the estate and the protection does not keep them away from creditors. If no one is named, or the named person died first, whether the protection applies and who is paid depends on the policy and the facts, and a lawyer can confirm.

If the money does end up in the estate, the estate trustee holds property for the people entitled to it after the deceased's debts are paid. Unless the will says otherwise, debts and funeral and testamentary expenses are paid from the residuary estate. For a dependant's support claim, insurance the deceased owned on their own life is treated as part of the net estate even when it passes outside the will.