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A Beneficial Conundrum

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Well, actually a Beneficiary poser: Long time life insurance client needs to change/update his beneficiaries, which is normally the most mundane thing we do (other than maybe address changes). But, there a twist: he has four (4!) primaries listed, including a trust for one of his adult children.

Of note: my client named zero (0) contingent beneficiaries. Typically, these are folks “second in line” in case the primary predeceases the insured. Not required, or even typically critical, but kinda comes into play here.

Okay, so far not really a big deal, but then he throws me a curve-ball:

Question, in the unfortunate event that [spouse] and I should pass away together, would her portion automatically go to [son]? How does that work and how do I make sure there is some sort of waterfall to protect my money and those beneficiaries I have listed?


So, I had a thought, but really not very certain of its validity. So I reached out to our carrier rep, who also had an opinion, but wasn’ very confient oin that, either. ZSo, he bumpled it up to the Vice President of Claims, who (very) helpfully replied:

“The rules vary by state and are usually called the Simultaneous Death Act (or similar).

In Ohio, the statute says this:

Except as provided in section 2105.36 of the Revised Code, an individual who is not established by clear and convincing evidence to have survived an event by one hundred twenty hours is deemed to have predeceased the event for purposes of a provision of a governing instrument that relates to the individual surviving an event, including the death of another individual.

So, what that means is that, if the husband and wife die in the same accident, then it would be assumed that the insured died first, unless there is clear and convincing evidence that the beneficiary survived for 120 hours after the accident.   The contingent beneficiary would receive the proceeds.  If no contingent, then it would go to the policyowner’s estate.

If the spouses die two days apart, then it would still be the same scenario, since the beneficiary did not survive for 120 hours.  If it is six days apart, and we have clear and convincing evidence of such, then the proceeds would go to the Estate of the beneficiary, because they survived the insured by more than 120 hours.”


So the bottom line is that, if they’re both hit by a bus and die simultabeously, the wife’s portion of the policy would be paid into my client’s estate. Which is I think what he was trying to ascertain.

Regarldess, I was told that the carrier would even be using this as part of a training module. Cool beans!

Also, #LearnedSomethingNew.

[Hat Tip: FoIB Brian D]

Original content copyright © InsureBlog


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