Are life insurance policies supposed to be included in the estate? My Aunt died and had a policy naming my dad and deceased uncle as beneficiaries.

Life insurance proceeds will be paid in accordance with the beneficiary designations set by the policy owner.  If your father was named as the beneficiary, then the proceeds, or whatever portion of the proceeds were designated to your father, will be paid to your father outside of the Estate.  If your rather and uncle were "co-beneficiaries", then its possible the share for your uncle could be paid to the Estate and distributed in accordance with your Aunt's will or, in the absence of a will, in accordance with the Pennsylvania laws of intestate succession.  The home can't prevent the policy payout.