Final answer:
If the beneficiary of a life insurance policy predeceases the insured and no changes are made, the death benefit becomes part of the estate and is distributed according to state intestacy laws.
Step-by-step explanation:
When the sole beneficiary of a life insurance policy dies before the insured, and the policyowner does not amend the beneficiary designation, the death benefit of the policy typically reverts to the insured's estate upon their death.
In such cases, the funds from the policy become part of the estate and are distributed according to intestate succession laws, unless the insured had a will with different stipulations. Since every state has its own intestacy laws, the hierarchy of heirs (spouse, children, parents, siblings, etc.) who will receive the proceeds may vary.
Additionally, the cash value of a whole life insurance policy serves as an account from which the policyholder can borrow; however, any outstanding loans against the policy will reduce the total death benefit payable.