by Insurance Expert » Thu Jul 30, 2009 03:54 am
There have been quite a few posts with this subject.
Many people have been saying that if there is not a named beneficiary, the proceeds get paid to the estate.
I chimed in and said that a policy could have a default beneficiary. I also said that I thought that most policies don't have a default beneficiary.
Anyway, I sold two policies today from two different companies and both of them on the application said what would happen to the money if no beneficiary was alive. In neither case would the money go directly to the estate.
Many people have been saying that if there is not a named beneficiary, the proceeds get paid to the estate.
I chimed in and said that a policy could have a default beneficiary. I also said that I thought that most policies don't have a default beneficiary.
Anyway, I sold two policies today from two different companies and both of them on the application said what would happen to the money if no beneficiary was alive. In neither case would the money go directly to the estate.
Posted: Fri Jul 31, 2009 04:35 am Post Subject:
Insurance Expert,
:arrow: I have no idea what your point is with this thread. :roll:
It's not done the way you desribe EVER!
That's right,... I said, EVER.
I'll say it again and try to use stronger language. When the beneficiary designation is left blank on a life insurance policy or an annuity contract the proceeds are paid to "The Estate" of the owner of the policy.
E V E R Y T I M E.
Period.
End of story.
Please provide any state law to the contrary because I like to know which state has a distribution method for this situation outside of the Probate Court system.
PLEASE, I'm not asking for your opinion SHOW-ME the state law that supports your claims.
Posted: Fri Jul 31, 2009 08:59 am Post Subject:
Experts I've a question..... would a policy ever be issued where there is no named beneficiary? I mean, wouldn't it simply defy the purpose of maintaining life insurance if I don't have anyone to pass an asset after my death?
Posted: Fri Jul 31, 2009 11:40 am Post Subject:
Hi..
I guess Expert is only claiming that it's impossible to
pass it on to the estate when the owner and the insured
are two different people. So, I don't get the confusion
over here.
Steven
Posted: Fri Jul 31, 2009 11:44 am Post Subject:
The example above would create a taxable consequence. If John is the owner, Mary is the insured, and Judy is the primary beneficiary, you have a Goodman Triangle. This will result in the death benefit being taxable rather than income-tax free. Hopefully an agent would not set up a policy this way.
You make a very good point. Let's assume that the agent wasn't stupid. This beneficiary change could have been made without the knowledge of the agent, or if the agent was involved, the beneficary change could have been irrevocable. By making it irrevocable it solves the problem of the Goodman Triangle. The completed gift would have taken place at the time of the beneficiary change. The value of the gift at that time could have been very little or perhaps nothing, thus solving the problem.
Thanks for that great observation.
Posted: Fri Jul 31, 2009 11:58 am Post Subject:
Experts I've a question..... would a policy ever be issued where there is no named beneficiary? I mean, wouldn't it simply defy the purpose of maintaining life insurance if I don't have anyone to pass an asset after my death?
In this discussion, what is more common is that a policy has a beneficiary designation, but the beneficiary is no longer living.
At issue, an insurance company would typically deny any application without a named beneficiary. However, this isn't always the case with a group policy.
Posted: Fri Jul 31, 2009 12:07 pm Post Subject:
Hi..
I guess Expert is only claiming that it's impossible to
pass it on to the estate when the owner and the insured
are two different people. So, I don't get the confusion
over here.
Steven
That's part of what I'm claiming. My claim is twofold.
1) An insurance policy can have default beneficiaries. For instance, it can be like I described where it goes to the owner if the owner is alive or the owner's estate if the owner is dead. Another example would be where it automatically goes to the spouse of the insured if living and if the spouse isn't living, it goes to the children.
2) It doesn’t make sense for the 1st default beneficiary to be the estate of the owner, nor does it make sense for it to be the estate of the insured. I’m not claiming that it doesn’t often get paid to the estate of the owner. However, this can only happen if the owner and the beneficiary are separate people and there are no default beneficiaries to the contrary.
Posted: Fri Jul 31, 2009 01:47 pm Post Subject:
Insurance Expert,
I have no idea what your point is with this thread.
It's not done the way you desribe EVER!
That's right,... I said, EVER.
I'll say it again and try to use stronger language. When the beneficiary designation is left blank on a life insurance policy or an annuity contract the proceeds are paid to "The Estate" of the owner of the policy.
E V E R Y T I M E.
Period.
End of story.
Please provide any state law to the contrary because I like to know which state has a distribution method for this situation outside of the Probate Court system.
PLEASE, I'm not asking for your opinion SHOW-ME the state law that supports your claims.
Gary, you are asking me to prove a negative. You are the one that is saying that there is a law that says that a blank beneficiary designation must be paid to the estate of the owner.
This is the best that I can do for “proof” that you are wrong.
1) I can’t find any law that says what you are claiming. Can you? I’d love to see it. I can’t find a law that doesn’t exist. Where is the law that says that there can’t be a default beneficiary?
2) See this thread from yesterday/today. This is an example of a policy without a beneficiary named and the insurance company not paying to the owner’s estate. http://www.ampminsure.org/life/not-signed-beneficiary.html
3) If an owner is alive, it would be impossible for an insurance company to comply with the law since a living person doesn’t have an estate.
4) Grab the first life insurance application that you can find. Look at the beneficiary designations. Most likely, in small print, there are default designation or it directs you to the contract. It doesn’t make sense to have default designations that can’t be followed.
I’m not arguing that the proceeds don’t often get paid to the estate. However, when this happens, it is because the owner and the insured are the same person and there are either no default provisions or the default provision is the estate. It is not because of state law.
It also wouldn’t surprise me if there is law that says that the proceeds get paid to the estate if the owner and the insured are the same person and there is no beneficiary listed and no default beneficiary.
The point of the thread is to correct incorrect information. On this board it has been told to people that if a beneficiary designation is not specifically named, the money will automatically go to the owner’s estate. That simply isn’t accurate information.
Posted: Sat Aug 01, 2009 04:21 am Post Subject:
Insurance expert,
I agree with you! That was exactly what happened with me. Our insurance compay couldn't find our beneficiary form. They sent me a form that showed what would happen. If there was a spouse then it would be paid to them. If there wasn't then it would go to the children ect. Luckly for me if anyone was going to contest it, I actually had a copy of the beneficiary form at home stating that I was
Posted: Sat Aug 01, 2009 05:43 am Post Subject:
Thanks for backing me up, Melanie. It's not too often that I post incorrect information, but if I'm wrong, I hope that Gary has something showing me the errors of my ways. I've tried hard to find something that contradicts what I'm saying, but I have been unable to find anything.
Posted: Sun Aug 02, 2009 07:01 pm Post Subject:
Melanie wrote:
I agree with you! That was exactly what happened with me. Our insurance company couldn't find our beneficiary form. They sent me a form that showed what would happen. If there was a spouse then it would be paid to them. If there wasn't then it would go to the children ect. Luckly for me if anyone was going to contest it, I actually had a copy of the beneficiary form at home stating that I was
Dear Melanie,
You are confused with the facts.
The original Primary Beneficiary on EVERY life insurance policy and EVERY annuity contract written in the United States of America with EVERY life insurance company and that means ALL life insurance companies is designated on the ORIGINAL APPLICATION.
The life insurance policy OR annuity contract WOULD NOT be issued without at least a Primary Beneficiary designation.
Insurance Expert is actually an anonymouse *CCC with mouse being the operative word.
Certified Clueless Clown
Probably from Kiplinger’s as they have the largest collection of CCCs on that site.
If ALL beneficiaries PREDECEASE the Owner/Insured or IF there ARE NOT any beneficiaries designated in the policy OR a subsequent Beneficiary Change Form then the proceeds of the policy would be paid to the Owner/Insured’s ESTATE upon the Owner/Insured’s death.
PERIOD.
END OF STORY.
Best regards,
P.S. #1, Don’t you just hate these so-called “experts” who won’t actually identify themselves on the Internet?
P.S. #2, Show-Me any state’s state law to the contrary and I’ll give you a gold star. By the way I don’t give a damn how it’s done in any “other” state other than Florida.
Florida Statute 222.13 is unambiguous.
Insurance Expert please identify yourself so I can check you “credentials” I’d just like to know if you are properly insurance licensed and if so how many “letters" you have after your name and how many years experience you have in the biz!
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