What happens to the proceeds of a life insurance policy if there is no named beneficiary?

When a life insurance policy does not have a named beneficiary, the proceeds are directed to the insured's estate. This is established under common legal practices surrounding life insurance policies. In the absence of a designated beneficiary, the funds become part of the decedent's estate and are subject to probate, meaning they will be distributed according to the terms of the will, or under state intestacy laws if there is no will.

This ensures that the policyholder's intended distribution of their assets is honored, even if they didn’t explicitly name a beneficiary for the life insurance policy. Therefore, it is crucial for policyholders to regularly review and update their beneficiary designations to avoid complications that may arise from the proceeds going to the estate.

The other scenarios outlined, such as the proceeds being paid to the state, held in trust until a beneficiary is named, or returned to the insurance company, do not align with how life insurance proceeds are typically handled when no primary beneficiary is designated. This makes the allocation of proceeds to the estate the most accurate and standard procedure.