Beneficiary Question

[Morpheus1967]

What is the name of your state? Ohio

Is it legal for a grandparent to name themself as beneficiary of a life insurance policy for their grandchild? Both parents are still alive. My understanding is that the beneficiary had to be the parent, parents, or legal guardians. Thanks.

 

[shell007]

What is the name of your state? Ohio

Is it legal for a grandparent to name themself as beneficiary of a life insurance policy for their grandchild? Both parents are still alive. My understanding is that the beneficiary had to be the parent, parents, or legal guardians. Thanks.

Your understanding is WRONG!!!

A named Beneficiary on a life insurance policy can be ANYONE from the mailman to the lady who works at Walmart.. if desired.


Who ownes the policy?

 

[Morpheus1967]

Your understanding is WRONG!!!

A named Beneficiary on a life insurance policy can be ANYONE from the mailman to the lady who works at Walmart.. if desired.


Who ownes the policy?

The grandmother purchased it, and named herself the benficiary.

 

[BelizeBreeze]

The grandmother purchased it, and named herself the benficiary.

SO WHAT.... ?

 

[shell007]

The grandmother purchased it, and named herself the benficiary.

Then nothing illegal has been done. The owner of the policy can/could name "Santa Claus" as the beneficiary if she wanted.

 

[lalalis]

The beneficiary of a life insurance policy must have an insurable interest in the life of the person insured. This generally means that the beneficiary must be someone who would suffer some economic loss if the insured person died. For example, your beneficiary could be a member of your family who depends on you or a business you own or even a bank who has lent you money.

 

[justalayman]

The beneficiary of a life insurance policy must have an insurable interest in the life of the person insured. This generally means that the beneficiary must be someone who would suffer some economic loss if the insured person died. For example, your beneficiary could be a member of your family who depends on you or a business you own or even a bank who has lent you money.

I believe you are confusing "beneficiary" with "owner" or purchaser.

To purchase life insurance, what you stated is generally correct but somewhere along the lines g-parents have been allowed to purchase life insurance on their g-kids.

An owner can name whomever they wish to name as beneficiary in most cases.

 

[lalalis]

The grandmother purchased a life insurance policy that states if the grandchild dies then she (the grandmother, herself) is entitled to the $... correct?

 

[justalayman]

The grandmother purchased a life insurance policy that states if the grandchild dies then she (the grandmother, herself) is entitled to the $... correct?

Yes, I see the original post that way. So the g-mom is not only the owner but the bene as well.

If I purchase a life insurance policy on anybody that I am allowed to, I can name me, my dad, my kids, or even you as bene if I choose. The restriction is on who is allowed to purchase the policy.

Additionally, g-parents often do this with the intent of transferring the policy (ownership) to the g-kids when they are older. In the meantime, it would only make sense to make the g-mom as bene (or mom if they were not having problems. at least that is what I assume the whole thing is about here.)

 

[Morpheus1967]

The grandmother purchased a life insurance policy that states if the grandchild dies then she (the grandmother, herself) is entitled to the $... correct?

Correct. That is what she did. Her original plan was to take it out for funeral expenses (the insured has passed away), but now she is withholding the money from the deceased's parents. But if you all are saying that the owner can name anyone she wants as the bene, I guess the parents are hosed. Thanks guys.

 

[Morpheus1967]

The beneficiary of a life insurance policy must have an insurable interest in the life of the person insured. This generally means that the beneficiary must be someone who would suffer some economic loss if the insured person died. For example, your beneficiary could be a member of your family who depends on you or a business you own or even a bank who has lent you money.

She wouldn't suffer at all. As stated, it was to pay for funeral expenses, time lost at work, etc... for her kids. Now they are fighting, and she is threatening to withhold all the money.

 

[justalayman]

She wouldn't suffer at all. As stated, it was to pay for funeral expenses, time lost at work, etc... for her kids. Now they are fighting, and she is threatening to withhold all the money.

If there was a verbal agreement as to what the insurance money was to be used for is irrelevant. The fact is, if the g-mom named herself as bene, it is legal. She is withholding nothing from the parents that belongs to them.

You have to remember who paid for the policy. Granted it seems a cold thing to do if the g-mom said she would use the funds for such and didn't but not illegal.

 

[Betty]

Lalalis was correct when stating the beneficiary must have an insurable interest in the life of the insured. They are the person(s) who will receive the policy's value at the death of the insured & there should be a financial loss to them at the insured's death. You can't just name anyone as bene. I worked for an ins. co. & we would not accept for example a friend as being named bene by the owner of the policy. However, close family members are automatically considered as having an insurable interest in the life of the insured. At our co. we would not accept an application on a grandchild with the grandparent being owner & bene without a parent also signing the app. "agreeing" to this transaction. However, some companies believe a grandparent/grandchild have a close enough relationship to accept an application & issue a policy to a grandparent as owner/bene on a grandchild's life without a parent also signing the application.

 

[justalayman]

Ok, not that I give up, I merely cannot find anything (yet) that legally defines the rights as purchaser and/or beneficiary to differentiate which must have the insurable interest.

So Betty, by your explanation you are telling me that I can purchase a policy on you as long as I name, say, your children or husband as bene? but I cannot purchase a policy on me and name my brothers girlfriend as bene? (there would be no financial loss to her with my death)

The other thing in your post that is odd is the fact you required the parents to give permission for a g-parent owner and bene policy on a g-child. What reason would there be for the parents to sign?

If it is a legality then you are saying there are other insurers that are breaking the law by allowing this w/out the parents signature, or; you were requiring something that was not legally required?

Now the insurance company you worked for may or may not have done things a particular way, some of this seems to be by their choice, not by legal requirement or restriction.

But regardless of all of this, basically, there is nothing wrong or illegal about the OP's situation. Agreed?

 

[Betty]

POST 1* In this case there seems to be nothing illegal with the grandparent being owner & bene on this policy.
At the major ins. co. I worked for as an underwriter: We would question why you (a stranger) would want to buy a policy on my life. I would have to sign any application for life ins. taken out on my life - other than minor children, the insured has to sign the application + the owner if the owner is someone other than the insured. A policy on my life could have for example my children, spouse, parents, etc. named as beneficiary. Close relatives have an automatic insurable interest. A friend would not. They would have to suffer a financial loss at my death - otherwise, it would be like gambling so to speak. There have been occasions when the amt. was reasonable & a friend was named as bene because the insured had no family & the friend was to handle final expenses - we would accept.
We would not approve an application if you named your brother's girl friend as bene on a policy you took out -- we would ask you to change it to someone else (close family member) or make estate bene. See POST 2* - ran out of room