Question : How are life insurance policies paid out? To the policy holder or the trustee?
My parents have a life insurance policy in my father's name. They are both trustees. They are now divorced. Who receives the benefits of the policy as it has now matured? Any help would be appreciated.
- asked by Plod
All Answers:
Answer #1
The policy holder is usually dead when a lifeinsurance policy is paid out. Get a job.
- answered by Wylie Coyote
Answer #2
It must be an endowment. Life policies are only paid on the death of the policyholder/named personand are paid to the beneficiaries named either onthe policy or in a will. If both parents arebeneficiaries (trustees) then it will be paid tothem both. They need to arrange with the insurancecompany who it needs to be paid to. Divorcelawyers will usually arrange for the paperwork tobe signed after an agreement has been made as towho benefits. They could split it or one couldassign it to the other.
- answered by nanaangela
Answer #3
If this is a term policy, it does not pay untilthe death of the named person. If the premiumpayments stop the insurance just goes away andthere is no benefit paid out.If it is somethingelse with a cash value (whole life, annuity, etc),it can be cashed out and the remaining value willbe paid to the owner(s). It sounds like they areboth "owners" as trustees and they will need toshare the money. As the previous poster pointedout, this is typically taken care of during adivorce settlement. If this item was missed (itusually isn't if the divorce attorneys areexperienced) then they will need to take care of.Either another court date or just split the moneythemselves.
- answered by JJ
Answer #4
They're paid out however it says, in theBENEFICIARY clause. The policy holder is DEAD, yaknow. So however they set it up to pay out, itpays out. GENERALLY it won't pay a minor. Policies aren't like bonds - they don't "mature". When the covered person dies, they pay the namedbeneficiary. The named owner of the policy getsto pick the beneficiary. TRUSTEES are overtrusts. Not insurance policies. You'll have toask the policy owner who gets the money when theinsured person dies. And they can say "it's noneof your business" which would be perfectly true.
- answered by mbrcatz17
Answer #5
Policies are paid out to the beneficiaries. Ifthe beneficiary is a trust, the money would bepaid to the trust. The trustee managing the trustwould then distribute the money according to theterms of the trust.So in your case, it sounds likeif your father died, the money would go to thetrust, and your mother would be the trustee,distributing the money according to the terms.Ifthe policy has really matured while they are alive(seems odd, unless your parents turned 100 with anendowment policy), the money goes to the owner.
- answered by LifeInsuranceAgent
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