Author
Bowtie Team
Updated on
2025-07-10
Disclaimer: This article is translated with the assistance of AI.
What happens to a policy if the holder passes away before the payment term ends? A recent TVB program, “Scoop,” highlighted a case where a policyholder’s daughter faced issues while handling the policy after her father’s death. The Bowtie insurance info team dives deep into the estate handling process for you.
Case Background from “Scoop”
A citizen sought help from the media, revealing that her father had purchased savings life insurance policies for her and her sister before his passing. Tragically, he passed away before completing the premium payments. So, what happens to these unfinished policies? To make matters more confusing, the individual received conflicting information when inquiring with the insurance company.
Three Key Roles in an Insurance Policy
Some might assume that continuing premium payments means the policy automatically transfers to the insured as personal property. However, it’s not that straightforward. The ownership of a policy depends on several roles: the policyholder, the insured, and the beneficiary:
- Policyholder: The person who purchases the insurance and legally owns the policy.
- Insured: The person covered by the policy. If they pass away during the policy term, the insurance company will pay out as per the contract.
- Beneficiary: The person who receives the payout when the insured passes away.
In practice, these three roles can be held by the same person or by different individuals. If the father was the policyholder, insured, and beneficiary all in one, upon his passing, the payout typically becomes part of his estate, awaiting distribution.
If the policyholder and insured are different people, the situation gets more complex. In the “Scooped” case, the policyholder has passed away while the insured is someone else, meaning the policy’s ownership may need to go through estate administration to be confirmed. (*Certain policy terms may stipulate that the policy terminates upon the policyholder’s death.)
Estate Administration Process Explained
Dealing with unpaid policies after a father’s passing, especially when it involves an estate, requires going through estate administration. This legal process ensures that assets (including insurance policies) are distributed according to the law.
- With a Will: First, check if the will appoints an executor. During the application, the executor must bring the will and death certificate to court to apply for estate administration, along with a statement of assets and liabilities listing all assets.
- Without a Will: The process is handled by legally designated heirs who must apply and provide supporting documents. This can be more cumbersome and may take several months.
Frequently Asked Questions on Policies
Can Continuing Payments Auto-Transfer a Policy After Death?
In the case reported by “Scooped,” an insurance intermediary suggested that the individual could continue paying premiums to maintain the policy.
However, this approach carries legal risks. When a policyholder passes away, the policy becomes part of the estate. Without formal estate administration to transfer ownership, continuing payments may not prove ownership and could even lead to the insurance company refusing to pay out the cash value.
Therefore, if a policyholder passes away, estate administration should be conducted to officially confirm the policy’s ownership.
If misled (e.g., by an intermediary suggesting estate administration isn’t needed) and unable to retrieve the policy’s cash value, consider these legal steps:
- File a Complaint with the Insurance Company : If staff provided incorrect information leading to a loss, you can raise a complaint.
- Seek Legal Advice : Consult a lawyer to assess if there’s evidence to file a lawsuit (e.g., for misrepresentation).
- Report to Regulatory Bodies : File a complaint with the Insurance Authority about the intermediary’s misconduct.
What Legal Points Should Policyholders Note When Buying Insurance?
When purchasing insurance, pay attention to these legal points to protect your rights:
- Clarify Roles : Understand the rights and responsibilities of the policyholder, insured, and beneficiary.
- Review Terms : Carefully read the policy details, especially clauses about transfer and beneficiary changes.
- Keep Documents Safe : Store policy documents properly for future estate handling.
- Inform Family : Let family members know about the policy’s existence and location to avoid disputes.
- Regular Updates : Adjust policy arrangements based on life changes.
What to Do If Insurance Reps Give Conflicting Policy Advice?
In such cases, refer to the policy terms and consult a professional lawyer to ensure you follow legal procedures rather than relying solely on verbal advice.
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