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Life Insurance: Who will get my contract money if the beneficiary dies before me?

Life insurance is a tool for transferring wealth. But… what happens if the beneficiary(s) are ahead of you? This is the question Kayla sent us.

Question from Kayla, June 25, 2022

What happens if the designated beneficiary(s) dies? Does the contract go to my heirs?

The question is interesting. When you enter into an insurance contract and write a beneficiary clause, you do not necessarily expect that the death of the beneficiary(s) can occur before our death. But if it does, what will happen to the capital saved? Two possibilities.

Life Insurance: The Dangers You Leave to Your Inheritors with a Poorly Drafted Beneficiary Clause

1. Beneficiaries by representation

My wife or partner PACS, let down my children, born or not, alive or represented, in equal shares among them, and let down my heirs. By choosing the standard beneficiary clause in a life insurance contract, the insured states that if the initially designated beneficiary dies, His heirs will be able to get the capital in his place. In the event that the beneficiary clause is drafted by the insured, it is recommended to indicate the name of the chosen person by adding the reference live or actress.

Life Insurance: Should we be satisfied with the standard beneficiary clause?

2. Secondary beneficiaries

The insured also has the option to designate other second-tier beneficiaries who have not no relation ship with the first. In this case, they must be identified as: my wife, otherwise I am my heirs or Mr. Martin, by default, Mr. Hughes, by default is my heirs.

Accuracy, as there are no heirs, has its utility. It is a method of life insurance in the event of the death (or assignment) of initially designated beneficiaries. The notary must in all cases identify the beneficiaries: mentioning the default is my heirs allows your life insurance not to find itself deadlocked, without any second or third rank beneficiary…

Namely: the contract holder can also choose to amend the list of beneficiaries of his life insurance by his will! However, it is recommended that you specify this to your insurance company.

Pay attention to the order of the recipients and the spelling!

For a life insurance beneficiary clause, the spelling and the order of the terms are very important.

example 1. The insured writes my sister and my living brother or representative: In the event of the sister’s death, the entire capital shall return to the brother, or, in the event of the latter’s death, to his representative. to predict Representation of beneficiariesYou must signify my sister and my brother, live or actress.

Example 2. The faithful write my children, living or represent, Mrs. Martin, lose Mr. Gerard, and disappoint my heirs. The insurer will share the capital between Ms. Martin and the insured’s children (including their heirs). In the absence of these people, Mr. Gerrard will receive the entire capital And the capital in case of death He will be restored in the caliphate.

To avoid errors of interpretation or risk of dispute, it is strongly advised that you take the time to properly draft your beneficiary clause and, if necessary, seek advice from your insurance company.

whether No beneficiary specified or can not be determined, the capital then enters successfully You no longer benefit from a premium life insurance plan.

Taxation of life insurance in the event of death

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