22 Jun Who would get this life insurance payout?

Q. What if a life insurance policy has a primary beneficiary and a contingent beneficiary, but the primary beneficiary refuses to collect the benefit? Would this money then go to the contingent beneficiary?
— Curious

A. The contingent beneficiary would get the cash.

A person who is designated as a beneficiary of a life insurance policy has a right to disclaim the proceeds, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

This means that the beneficiary is essentially, saying “Thanks, but no thanks. I don’t want to accept the proceeds.”

“If the primary beneficiary disclaims the proceeds, he or she does not have the right to decide who should be paid instead,” Whitenack said. “The insurance company will then pay out the proceeds as if the person making the disclaimer died immediately before the insured person died and will pay the contingent beneficiary.”

The method for disclaiming insurance proceeds will vary among the insurance companies, Whitenack said. Some may request a letter from the primary beneficiary and others will ask the primary beneficiary to complete a form.

Good luck!

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