My aunt passed away recently. She had a life insurance policy with Liberty National (now Globe). It is a current policy and she had paid it for years.

She wasn't married and had no kids. Her mother (my grandmother) was her beneficiary. My grandmother passed away several years ago. Evidently, my aunt never changed her beneficiary. Why, I don't know.

Anyway, the day that my Mom and other aunt made arrangements the funeral director (and funeral home) said everything was good with the insurance. We had the funeral two weeks ago tomorrow. Today, my aunt got a call from the funeral home (I'm assuming the director) and they told her that the insurance wasn't going to pay because my aunt, "did not have a living beneficiary".

This, of course, upset my aunt and Mom. They were told the insurance was current and would cover it, and the funeral was carried out. Now, this?

They did not spend all the policy money on the funeral. We had already figured that the remainder would be paid "To the estate of" my aunt and her estate would have to be put through probate. We did not forsee that the insurance just wouldn't pay.

Now, the funeral home we used has changed hands since the last time we used them. They don't seem to be doing the same amount of business as they had in the past, and may be suffering from poor management. Could this be an issue of the funeral home screwing something up?

My aunt (the dead one) does have enough money currently in her checking account to pay for the cost of the funeral. My Mom is on that account. Should, if pressured by the funeral home, she write a check to pay for the cost of the funeral, and then deal with the insurance company?

We really don't know what to do, and it has upset my Mom.

Update:

My aunt spoke with the insurance company today. The rep told her that they would need a court order before any of the insurance would be paid out, even to the estate. My aunt asked the particulars of obtaining a court order. The rep said she didn't know. My aunt asked if it could be done at the court house. The rep said she didn't know. My aunt asked if putting the estate through probate would suffice as a court order. The rep said she didn't know.

Essentially, the insurance rep either legitimately didn't know anything, or she was just unwilling to divulge any of that information.

So, it looks like Monday they will contact a lawyer, and over the weekend they will try to find the original policy at my aunt's house. Wish them luck on that one.

They will likely pay the funeral costs from my aunt's estate and begin the process of waiting for the insurance to be resolved (however long that may take), but they want to speak with the lawyer first to see what he advises.

Update 2:

Update for anyone in Alabama who may face a similar situation:

So, the issue does, in fact, stem from my aunt not having a "living beneficiary". However, it would not be an issue at all if her life insurance policy had been $32,000.00 or less. It was $35,000.00. The, seemingly, arbitrary number of 32 being key in this issue as I guess in this state 32k or less doesn't require as many loopholes. Go figure.

The court order will be needed. It can be taken care of, we hope and were assured, by the estate lawyer who handled probate when my Pops died. My Mom and aunt meet with him tomorrow. He has said that the process for obtaining the court order isn't long (time wise), and once it is submitted the agency will release the funds to the estate. At that point the funds can be used for final expenses.

Once that happens it brings us back to the point we expected to be at now, beginning the process of putting the estate through probate. It is still possible they decide to pay the funeral costs from my aunt's checking account, but they want to speak with the lawyer first to be comfortable in doing so.

Fortunately, her 401k account has been a (mostly) less complicated matter.

Just thought I'd drop the update in case anyone faces a similar issue.

Update after speaking with the lawyer:

We have a winner!

Lonnie:

quote:
Your going to have to reopen your grandmother's estate. I found a $10k policy my grandfather had during an unclaimed property search. (we have the same name.)

To collect, we had to reopen his estate.

My grandmother's estate will have to be reopened and put through probate. My Mom and other aunt are suviving heirs. Their two brothers, my two uncles have passed. Which means that my Mom and aunt, along with both of my married-in aunts and their four grown children will have to sign agreement to forego their claim to the estate (essentially only the life insurance which is the only thing without a beneficiary designated).

All of this over $35,000 minus the funeral expenses. Go figure.

Folks......please take care of your affairs while you can. Oh, and if it had been no more than $32,000 none of this would be necessary.

Thanks for the help, everyone!

This post was edited on 4/15/22 at 2:51 pm