Who Gets the Insurance Money After a Simultaneous Death?

When it comes to life insurance, people often name their spouse or a child as the beneficiary. While this makes sense and is wise, who gets the money if the two people both die at the same time?

Under Maryland law, if the evidence suggests that both people passed away simultaneously, the policy pays out as if the person who bought the insurance lived longer than the person who was named as the beneficiary.

Why does this matter? Let's look at an example to see how drastically it can impact the case.

An elderly man names his son as the beneficiary of his life insurance policy, not his wife. He and his son are involved in a car accident coming back from playing golf, and they're both killed.

If the son was assumed to have lived longer, the policy would pay out -- however briefly -- to him and become part of his estate. He would then die and pass the money on to his children in accordance with his will.

However, since Maryland law assumes that the man lived longer, the beneficiary was dead at the time that the father died. This means that the money is part of the man's estate and goes to his wife, in accordance with his will, which leaves everything to her.

This may not matter if the wife and son are on good terms. The wife may simply give the money to the son's family or children, knowing that is what the husband intended. However, this does show how important it is to know how the law factors into all situations, no matter how improbable they are, when doing estate planning.

Source: General Assembly of Maryland, "Article - Courts and Judicial Proceedings," accessed Sep. 15, 2017

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