Who can claim a life insurance policy?

Most life insurance policies are designed to specify the beneficiaries of the policy proceeds. Beneficiaries are usually named by the owner of the policy, and can be any person, place, or thing. The owner of the policy is usually the insured person, but can also be any person or organization with an insurable interest in the person. The named beneficiaries can be changed by the owner of the policy.

Some types of life insurance policy are designed to pay to a funeral home as the only named beneficiary. This type of policy is known as a final expense policy, and is sometimes referred to as funeral insurance. When the insured passes away, the named funeral parlor or director will claim the policy and use the proceeds to cover the costs of your funeral and interment, whether it is cremation or a traditional burial plot.

In some cases, a company can buy life insurance on you, naming itself as the beneficiary. The company has to have an insurable interest, such as losing a vital employee, where the loss of the employee would entail hardship on the company. For example, a company that would suffer from your loss or even go out of business might take out a life insurance policy on you.

Named beneficiaries can be anyone, but is usually someone who will suffer from your loss, such as a family member or close personal friend. However, the owner of the policy has the discretion of naming any beneficiaries, and might name a pet, a property, or an organization rather than a person or persons. Where the beneficiary is not able to claim the proceeds personally, the caretaker or legal representative would be the claimant.

If no beneficiary is named, or all beneficiaries have passed away prior to the policy maturing, the next closest relative is generally the one to claim the life insurance policy. This could be a widow or children, and may include domestic partners under many state laws. Claimants of this type have more difficult with settling the policy and are subject to disputes and legal engagements, making this the least favorable way to claim a policy. This is why it is important to review life insurance policies periodically so they kept are up to date.