An insured dies and the policy names no surviving beneficiary, and no settlement option had been elected. Under the payment-of-claims provision cited at 40 P.S. § 510(l), how should the insurer proceed?
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Why D is correct
The payment-of-claims provision cited at 40 P.S. § 510(l) exists precisely to close this gap: when the named beneficiary has not survived and no settlement option was elected, the insurer does not sit on the money or improvise a distribution. It pays as the provision directs, which for a policy without a surviving beneficiary means payment to the insured's estate, so the proceeds pass through probate to the lawful successors. The Pennsylvania Insurance Department's outline includes this provision among the standard life provisions because producers must be able to explain to clients what happens when the beneficiary designation fails.
Why the other options are wrong
- A) The insurer has no right to hold the proceeds indefinitely; the payment-of-claims provision supplies a definite payee when the beneficiary designation fails.
- B) The selling producer is never the default recipient of death proceeds; that would conflict with the insurer's fiduciary handling of claims under Pennsylvania law.
- C) Payment does not follow an ad hoc relatives formula; it follows the payment-of-claims provision, which points to the estate absent a surviving beneficiary.
Memory hook
No beneficiary left standing? The estate steps up — the provision never strands the money.