Life insurance proceeds issued to estate with no will or probate in Texas; potential bad faith?

Question

Can life insurance proceeds be issued to an estate when no estate has been opened, especially if there is no will, assets, or probate involved? My mother’s life insurance named my dad as the sole beneficiary, but he passed away before her. The insurance company states their policy directs proceeds to the estate if the beneficiary predeceases the policyholder, as per their language: "If there is no designation or surviving beneficiary, we pay the proceeds to the insured’s estate." There were no contingent beneficiaries. Despite sending all requested documents over two months, I was informed only after the checks were issued that they sent the proceeds to an estate, which has not been established. My siblings are unresponsive and not participating in estate dealings. It's been almost three months since the checks were issued and six months since my mother's passing, and I have made no progress. This situation places extreme stress and extra burdens on me. Could Texas Code 1103.152 help in this matter, is there potential bad faith practice by the insurance company, and how can this be resolved without my siblings’ cooperation?

John Michael Frick · Answer

With the policy not naming any contingent beneficiaries, the insurance company must issue a check for the policy proceeds to the Estate of the decedent.  It would be bad faith if the insurance company issued the check to you and/or your siblings personally. 
 
The executor of the decedent's estate (if the decedent had a Will) or an heir at law of the decedent such as yourself would then need to file an application for probate.

James L. Arrasmith · Answer

In Texas, life insurance proceeds can be issued to an estate if there is no surviving beneficiary, but this process can become complicated if no estate has been opened. Since your mother’s life insurance policy directed the proceeds to the estate when the beneficiary (your father) predeceased her, the insurance company may have followed its policy language. However, if the estate hasn’t been established, the proceeds being sent there could cause delays in distribution. 
 
Texas Code 1103.152 addresses the insurance company’s responsibility to pay proceeds promptly, which could help if the insurance company is unreasonably delaying payment. If they have not acted in a timely manner or have caused unnecessary delays, you may have grounds for a bad faith claim. This could apply if the insurance company failed to provide a reasonable explanation for the delay or mishandled the situation after the checks were issued. 
 
To resolve this without your siblings' cooperation, you may need to establish the estate in probate court to legally receive the proceeds. If your siblings remain unresponsive, you can potentially petition the court to appoint someone to administer the estate. In cases of bad faith or unreasonable delays, you might also consider consulting with an attorney to explore legal action against the insurance company.

Q: Life insurance proceeds issued to estate with no will or probate in Texas; potential bad faith?