Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Everyone does die, so do you mean all at once or a few at a time? ;)When a person passes and they have life insurance, in order to pay a claim, the insurance company must be presented a certified copy of the death certificate. Usually it is a good idea to have several certified copies of a death certificate made at the same time, around 5 or 6 as there will be many times where a copy will be asked for.In the case of life insurance, when the death claim is filled along with the certified copy of the death certificate, an insurance company begins the process of generating a check (s) to the stated beneficiaries on that policy. The check includes any interest gained from the date of death till the date of the check being created. Normally within 5 working days checks are issued after the claim form and the other required documents are presented.So that should answer your question if everyone dies and they have insurance, but they die as they have for all time. If we all go at once? Well..... would it matter how claims get paid at that point?
Another part to this answer is that not all life insurance policies ever pay a death claim. Most life insurance is not designed to be in force when you die unless you die younger than average.
Term Life Insurance only pays a death claim if you die while it is in force. That's usually 20-years when you are in your 30's and 40's and often up into your low 60's. But most people don't die that young.
Other insurance is tied to your employer and only covers you during your working years. Most people don't die during your working years. So the insurance company gets to keep all those premiums.
Whole-life insurance is priced much higher than the others because it will pay a death claim 100% of the time unless you cancel the policy.
All insurance is priced based on the likelyhood of it ever paying a death claim. That's why a healthy 35 year old man can buy a million-dollar 20-year term policy cheaper than a 70-year old would pay for a $10,000 whole-life policy. One is very unlikely to ever cost the insurance company anything. The other will certainly be paying a death claim within the next couple decades if not sooner.
If you are asking how life insurance would work if all the beneficiaries died before the insured person did, the death benefit would do to the estate of the policy owner. Assuming the owner is the insured, and has no surviving spouse, the life insurance proceeds would then go through probate, with its accompanying fees and taxes. That is why it is important to keep beneficiaries on a life insurance policy up to date, so that they have not all died by the time the death benefit is paid.
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Term Life Insurance only pays a death claim if you die while it is in force. That's usually 20-years when you are in your 30's and 40's and often up into your low 60's. But most people don't die that young.
Other insurance is tied to your employer and only covers you during your working years. Most people don't die during your working years. So the insurance company gets to keep all those premiums.
Whole-life insurance is priced much higher than the others because it will pay a death claim 100% of the time unless you cancel the policy.
All insurance is priced based on the likelyhood of it ever paying a death claim. That's why a healthy 35 year old man can buy a million-dollar 20-year term policy cheaper than a 70-year old would pay for a $10,000 whole-life policy. One is very unlikely to ever cost the insurance company anything. The other will certainly be paying a death claim within the next couple decades if not sooner.