Who Can be Named a Beneficiary under a Group Life Insurance Policy

Each covered employee has absolute freedom to name any beneficiary she wants, although some states prohibit the naming of the employer as a beneficiary. Also, the employee may change the beneficiary as often as she wants. If the named beneficiary does not survive the insured, and there is no secondary beneficiary named, the death benefit will be paid to the estate of the covered employee or to a successive beneficiary specified in the master contract. In other words, the master contract may give the insurer the option of paying the proceeds to one or more of the following survivors: spouse; parents; children; brothers and sisters; or the estate’s executor.

A facility of payment clause in the master contract allows the insurer to pay part of the proceeds (typically up to $500) to any person who has incurred funeral or last illness expenses for the covered employee (even though the named beneficiary may still be alive). Furthermore, the facility of payment clause may allow the insurer to make payments on behalf of a minor beneficiary or legal incompetent to a relative assumed to have “custody and principal support” of the beneficiary until a guardian is appointed.

The recipient of the proceeds can elect an optional method of settlement in place of a lump sum.

Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM

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