What happens if the policy owner passes before the insured?

There are four parties involved in any life insurance policy and they can all be separate: the insurance carrier, the policy owner, the insured, and the beneficiary. It is not mandatory for the beneficiary (the person receiving the death benefit after the passing of the insured) to also be the insured in the policy. For example, a married man with children that has a life insurance policy written on his wife, making their child the beneficiary. The question is- what happens if the policy owner, (the husband) passes before the person who was actually insured?

A situation where the policy owner dies before the insured is entirely plausible and has been the reality for many already. Remember- action should be taken as soon as possible. Steps must to be taken immediately to get in touch with the life insurance carrier the husband had without delay. These steps include:

1. Locating the life insurance policy

   1. A life insurance policy is always sent to the address on file of the policy owner, not the insured or beneficiary unless requested. In this example, the residence of the husband is where efforts should begin. Ideally, the wife would know what carrier he went with, but asking around to close family members is always a good idea.

2. Contacting the carrier

   1. Every carrier has a toll free contact number that is reachable during business hours. Once the policy is located, call the carrier and inform them the policy owner has passed away.

3. Informing them of the policy owner's death

   1. They will instruct you through the next steps of transferring ownership of the policy, likely to the insured, or the wife in this example. If no effort to transfer policy ownership is undertaken, the policy will remain in what is now the deceased policy owner's estate.

It is imperative to start this process as soon as possible- if too much time passes after the death of the policy owner, the policy could lapse after the passing of the agreed upon premium payment date thus kicking the policy out of force. If the policy is kicked out of force, it must be first brought back into force with the repayment of missed premiums, before the payment can be issued. This is important to remember regardless if the insured is still alive.