June 27, 2017
After inventorying all the policies affected by the death, all the administrative formalities with the insurers concerned must begin fairly soon in order to settle the benefits prescribed under the policies.
Documents to compile
The larger the number of insurers involved, the more complex becomes the broker’s task, since each company usually has its own procedures and its own requirements concerning documents to produce and stages to adhere to.
A death inevitably brings with it grief and distraughtness. Nevertheless, the beneficiaries must be firm and thorough in producing the legal documents required by the insurers. Obviously, the first documents required are the death-certificate register extract, the medical certificate stating the cause of death (only where there is death coverage) and the beneficiaries’ identification documents. These requirements are common to any claim under a life-assurance policy. Complications may arise at this point, since some insurers require originals or certified true copies whereas many local authorities now issue only digital documents and advise applicants to see a notary for conformity certification. In this digital age, practices should be brought up to date in order to reflect the day-to-day reality of our society. Surely, if an electronic document is acceptable when subscribing a policy, so should it be at the time of the policy’s settlement.
Identification of beneficiaries
Where beneficiaries are specifically named in the relevant clause of a life-assurance policy, production of their identity documents, together with their payment instructions, are sufficient to release payment of their share in the benefits. Each of the beneficiaries enjoys strict confidentiality, with individual follow-up by the insurer. However, the beneficiaries may appoint as attorney the notary handling the inheritance, so that he can be directly informed by the insurer of the amounts received, which must be included in the inheritance declaration.
If the policy’s beneficiary clause contains a generally-worded designation such as the policyholder’s legal heirs or children, the insurer has the duty of determining who are the persons entitled to benefit, and what is the share to which they are entitled. The deed of inheritance drawn up by the notary suffices in most cases to meet these needs.
Where the beneficiaries benefit not by a specific right arising from a policy stipulation in favour of another, but in their capacity as entitled to inherit, the policy benefits must be included in the deceased person’s estate. The payment of the death benefit will then be made from the account opened for the estate. The estate assets including the policy benefit shall thereupon be distributed among the heirs in the proportions laid down in the deed of inheritance.
Beneficiaries in special circumstances
Frequently, the particular circumstances of beneficiaries complicate the situation and affect payment of the benefit.
If a beneficiary predeceases the policyholder and the latter has not made any provision for this, the policy’s general conditions should be checked for any relevant provision: for example whether the beneficiary’s rights vest in his descendants, or those rights revert to the policyholder, or the benefit should be distributed among the surviving beneficiaries.
Where there are legally incapable beneficiaries, the payment of benefit must observe the civil-law rules governing the protection of their interests and may, in certain cases, require formal authorisation by the courts.
The beneficiary may also not be tax-resident in the same country as the deceased. In this case, the beneficiary should be notified of any tax obligations and declarations required in his country of residence. The tax authorities in his country of residence will also be informed of the benefit paid if automatic exchange of information arrangements exist between the two countries.
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Marc Dhondt
Article written by Valérie VAES – The content of this newsletter is governed by the limitations and legal notice of OneLife’s website.