Owners, Beneficiaries, and Insureds

[theinsuranceman]

Trying to figure out if I'm wrong, or maybe the answer varies by state or by carrier. I've always been under the impression that the owner of the policy decides who the beneficiary is.

I know the owner of the policy needs to have insurable interest on the insured but does the beneficiary need insurable interest in the insured? Another agent was telling me the beneficiary also needs insurable interest so as to prevent intentional harm to the insured.

Looking for answers not educated guesses please.

 

[BarryNY]

Although many people name family members as beneficiaries on their life insurance policies, it is certainly not a requirement. There are almost no rules restricting who you can choose, and you can change your beneficiary at any time (for example, after a divorce). The only universal restriction for life insurance beneficiaries is age. You cannot name a minor as your beneficiary. To provide a person under the age of 18 with death benefits, you would need to designate a legal guardian or a trust as your beneficiary.

If you are married and live in a community property state, there may be rules requiring your spouse to waive his or her rights before you can designate someone else as your life insurance beneficiary.

People also name charities, churches & trusts...

 

[DonP]

When you take out a policy you the insured can’t name anyone you want the beneficiary. For instance one time I named a cousin and they questioned the reasoning . It was because the insured provided support to the cousin and the insured’s death would hurt the cousin financially.After the policy’s issued you can basically name anyone you want . I’m sure some CO’s might question some beneficiaries.

 

[Tahoe Ray]

Trying to figure out if I'm wrong, or maybe the answer varies by state or by carrier. I've always been under the impression that the owner of the policy decides who the beneficiary is.

I know the owner of the policy needs to have insurable interest on the insured but does the beneficiary need insurable interest in the insured? Another agent was telling me the beneficiary also needs insurable interest so as to prevent intentional harm to the insured.

Looking for answers not educated guesses please.

Need and purpose.

That is the standard that many carriers use to evaluate suitability.

It's why if you buy a policy and name your friend down the street your beneficiary, it will probably be declined.

Normally, the bene needs to see some financial loss upon the death of the owner/insured.

I don't know about FE but a lot of the traditional life carriers want to see that financial relationship between the bene and the insured.

 

[shonceman]

Need and purpose.

That is the standard that many carriers use to evaluate suitability.

It's why if you buy a policy and name your friend down the street your beneficiary, it will probably be declined.

Normally, the bene needs to see some financial loss upon the death of the owner/insured.

I don't know about FE but a lot of the traditional life carriers want to see that financial relationship between the bene and the insured.

@theinsuranceman , you’ll notice that a couple of agents, like @Tahoe Ray in the quoted post, refer to carrier policy. That’s the real key. Insurable interest is obviously a concept from insurance law, but carriers vary on how narrowly they interpret that. The real answer to your question can be found in your carrier’s agent manual or the underwriting Dept.

 

[BarryNY]

Excerpt from the Digital BGA script (and many other scripts I've seen):

So folks are usually interested in talking with us for one of three reasons:

The first reason is that they have no coverage and don’t want to burden a loved one with their funeral or cremation expenses.

The second reason is that they have some coverage but could use a little more.

And the third reason is that they would like to leave a little something for their children, grandchildren, a place of worship or a charity.

Don't see any "insurable interest/financial relationship/need & purpose" with the third reason...

SO - it looks like everyone has an opinion and "it depends on the carrier" seems to be the answer...

What's Senior Life's UW policy on the matter?

 

[theinsuranceman]

Excerpt from the Digital BGA script (and many other scripts I've seen):

So folks are usually interested in talking with us for one of three reasons:

The first reason is that they have no coverage and don’t want to burden a loved one with their funeral or cremation expenses.

The second reason is that they have some coverage but could use a little more.

And the third reason is that they would like to leave a little something for their children, grandchildren, a place of worship or a charity.

Don't see any "insurable interest/financial relationship/need & purpose" with the third reason...

SO - it looks like everyone has an opinion and "it depends on the carrier" seems to be the answer...

What's Senior Life's UW policy on the matter?

With Sr Life the owner can now (recently added) have a charitable organization receive up to $1000 of the proceeds. In addition to naming family members, I've never had a problem naming a church, fiance/fiancee, girlfriend/boyfriend, or funeral home for someone with no living family, beforehand.

 

[DonP]

Now with eapps Benificiary’s not scrutinized as no human to question it.

 

[WinoBlues]

My devalued 2 cents.

I agree that it is mostly company by company. Also, my experience is Fraternals are stricter on who can be named.

I have seen many minors named as beneficiaries. Mostly on FE policies. many of the older app do not have a place for the bene DOB. I always write it in so that I have it when I write them later.

I believe Traditional is stricter on insurable and financial interest than FE. Could be simply because of the face amounts.

 

[WinoBlues]

Now with eapps Benificiary’s not scrutinized as no human to question it.

With Eapps you are sometimes restricted to certain answers in a drop-down box. With paper apps you can write in just about anything.