Your question doesn't say what kind of insurance this was, who bought the insurance or for what purpose.Ordinarily, an insurance company pays a claim to the named insured, unless there is something in the policy that says otherwise. One example is car insurance, where the car loan company is also named in the policy, either as an "additional insured" or a "loss payee," so that if the car is totalled the insurance pays off the loan first, although the owner of the car is the named insured.If the purpose of the insurance was to fund the 401k in the event of the employee's death, then the sponsored company (named insured) would have to then pay the money, when received from the insurance company, into the 401k, subject to ERISA.ERISA is a very dense, technical piece of legal writing. You really should talk to a lawyer who is very familiar with employee benefits plans if you have any kind of problem in this area.  You can look for a qualified attorney at our website, http://attorneypages.com