Quick answer (plain language)

If a life insurance policy has no living named beneficiary at the time of the insured’s death, most insurers will pay the policy proceeds to the decedent’s estate. Money that becomes part of the estate will generally be subject to creditor claims presented in probate. To protect proceeds from creditor claims you typically need to arrange a non‑probate or creditor‑resistant transfer before the insured dies (for example, by naming a living beneficiary, changing ownership, or placing the policy into a properly drafted irrevocable life insurance trust). After death, options are limited and depend on the policy terms, whether a probate or small‑estate procedure applies, and whether a creditor successfully files a claim against the estate.

How this works under Oregon law — the basics

When a life insurance policy has no valid beneficiary at death — for example, the beneficiary predeceased the insured and no contingent beneficiary exists, or the policy owner simply did not name anyone — the insurer commonly pays the proceeds to the insured’s estate. Once proceeds are payable to the estate, they are typically part of the probate estate and therefore subject to the normal probate process and creditor claims against the estate.

Key Oregon sources explaining probate, estate administration, and intestate succession are maintained by the Oregon Legislature and the Oregon Judicial Department:

• Oregon Revised Statutes and the online ORS portal: https://www.oregonlegislature.gov/bills_laws/Pages/ORS.aspx
• Oregon Judicial Department — probate information and procedures: https://www.courts.oregon.gov/services/Pages/probate.aspx

Because proceeds paid to an estate are handled in probate, creditors that follow Oregon’s claims procedure can typically assert claims to reduce the estate balance that would otherwise flow to heirs or distributees.

Typical real‑world outcomes (hypothetical examples)

Example 1 — No named beneficiary: Alice owns a life policy and dies without naming anyone. The insurer pays $200,000 to Alice’s estate. During probate, a business creditor files a timely claim. If the claim is allowed, the creditor is paid from estate assets before beneficiaries receive distributions.

Example 2 — Named beneficiary vs estate: Bob named his adult child as beneficiary. The insurer pays the child directly. That payment is usually non‑probate and not reachable by most of Bob’s creditors (unless other legal claims apply), because it did not become an asset of the probate estate.

Example 3 — Ownership change before death: Carol transferred ownership of her policy into an irrevocable life insurance trust (ILIT) years before she died. The insurer pays the trust. Because the trust owned the policy, proceeds bypass probate and, depending on the trust terms and timing, may be shielded from Carol’s creditors.

Practical steps to protect life insurance proceeds (what to do now)

If you are the insured or a policy owner (before death):

1. Check the policy and beneficiary designation form. Confirm who is named as primary and contingent beneficiary and whether the owner matches the insured.
2. Name a living beneficiary (or contingent beneficiary). The simplest protection is to name a person or entity (for example, a trust) so proceeds pass outside probate.
3. Consider changing policy ownership to an irrevocable trust (an ILIT) or to another person carefully. Transfers can have tax consequences and may be attacked by creditors if done as a fraudulent transfer, so get legal and tax advice before transferring.
4. Keep beneficiary designations up to date after major life events (marriage, divorce, birth, death).
5. Coordinate beneficiaries with your estate plan so proceeds go where you intend while minimizing creditor exposure.

If the insured has already died and no beneficiary exists (what the named executor or potential heirs should do):

1. Contact the insurer immediately. Ask whether the company has a beneficiary on file and whether it intends to pay the proceeds and to whom.
2. If the insurer will pay the estate, begin probate (or small‑estate) administration so the proceeds can be collected and distributed according to Oregon law.
3. Be aware that creditors can file claims against the estate during the claims period under Oregon probate rules. Follow the notice and claims procedures closely. See the Oregon Judicial Department probate page for procedural requirements: https://www.courts.oregon.gov/services/Pages/probate.aspx.
4. Explore whether a small‑estate process applies. Oregon has mechanisms for simplified handling of small estates that may reduce exposure and administrative costs — check the OJD resources and consult an attorney.

Common legal tools people use to keep proceeds out of probate and away from creditors

• Direct beneficiary designation: The simplest and most common way to keep proceeds out of probate is to name a living individual or a trust as beneficiary.
• Irrevocable Life Insurance Trust (ILIT): A properly drafted and funded ILIT owns the policy; proceeds go to the trust and typically avoid probate. The trust should be created and the policy transferred well before death. Work with an estate planning attorney to avoid gift‑tax or estate inclusion problems.
• Changing policy ownership: Transferring ownership can remove the policy from the owner’s probate estate, but transfers may be vulnerable to creditor attack if done to defeat existing creditors.
• Payable‑on‑death (POD) or transfer‑on‑death (TOD) designations where available: Some accounts have POD/TOD options; life insurance generally uses beneficiary forms instead.

Limits and risks — what protection is not guaranteed

• Transfers made shortly before death can be attacked as fraudulent transfers. Creditors or a bankruptcy trustee may challenge transfers made to avoid debts.
• If a policy is paid to an estate, creditors with allowed claims may reach those funds during probate unless a specific statutory exemption applies.
• Some payments may be subject to federal or state estate taxes or to claims under family‑maintenance statutes in limited cases.
• Beneficiary designations usually control over a will. If you expect proceeds to pass under your will, but the beneficiary designation on file names someone else (or no one), the insurer will follow the designation.

Helpful hints

• Immediately locate the life insurance policy and any beneficiary designation forms. The insurer must follow the designation on file.
• Keep beneficiary designations in writing and keep copies with estate planning documents. Confirm receipt with the insurer after changing a beneficiary.
• If you inherit life insurance proceeds as a beneficiary, document communications and payments and consult an attorney if creditors attempt to claim the funds.
• If you’re the policy owner and worried about creditor exposure, consult both an experienced estate planning attorney and a tax advisor before making ownership or beneficiary changes.
• When an insured has died with no beneficiary, consult an Oregon probate attorney promptly — there are strict time limits for creditor claims and administrative steps to protect the estate.