What happens to insurance proceeds if the designated beneficiary dies?

By on Mar 21, 2017

A person who purchases life insurance is called the policy holder or policy owner. Life insurance policies typically allow the policy holder to designate a beneficiary to receive the proceeds of the insurance when the person dies (assuming the life that is insured is that of the policy holder). In some cases, an alternate can also be selected, but, what happens if there is no alternate? Does the insurance go to the estate of the beneficiary; the estate of the policy holder; to the government?

You may be happy to know that the insurance money does not go to the government. It goes to the estate of the policy owner. If the policy owner had a will, the insurance will be distributed according the will. If the policy holder did not have a will, it will be distributed according to the Succession Law Reform Act, R.S.O. 1990, c. S.26 (SLRA) provisions that deal with distribution of intestate estates. The SLRA provides for a hierarchy of beneficiaries that start with the spouse and children of the deceased at the top. Note that it is only married spouses who inherit pursuant to the SLRA, not common law spouses.

Note that this article is intended to provide general information with respect to Ontario Insurance policies of people who live in Ontario who have beneficiaries who also live in Ontario. For information specific to your particular circumstances it is important to consult with a lawyer in your particular jurisdiction about your particular circumstances.