Beneficiary Rights: Witness Signatures And Life Insurance Claims

When it comes to life insurance, selecting a beneficiary is crucial. A beneficiary is the individual or entity you choose to receive the benefits of your life insurance policy or any remaining advantages of your annuity contract upon your death. While it is not mandatory to name a beneficiary, doing so ensures that your benefits are distributed according to your wishes. It is essential to keep your beneficiary designations updated, especially when significant life changes occur, such as marriage, the birth of a child, or divorce. Most financial services companies provide forms or websites to designate beneficiaries. Typically, two witnesses are required to sign and provide their addresses, and these witnesses cannot be the beneficiaries themselves.

Who can be a witness?

A witness is required to confirm that the testator has indeed signed their own documents. The witness will confirm this by signing the documents as well to make them a legal document.

When it comes to witnessing a signature on a life insurance policy, the signature must be witnessed by a "disinterested person", in other words, someone who is not listed as a beneficiary. A witness can be any person that is not named as a beneficiary. Your personal acquaintances can best serve as witnesses should the designation be contested in a court of law.

In the case of a will, a witness cannot be a beneficiary of the will, the spouse of a beneficiary at the time of signing, or a minor. Each witness must be at least the age of majority and mentally sound.

In general, to be "of sound mind" means to be mentally capable. In this context, it means the witness is able to understand and appreciate the contents of the document, who the testator is leaving assets to, who the executor will be, and how the document will change the estate settlement process.

It is important to remember that witnesses are not required to read the will or know its contents.

Who can't be a witness?

When it comes to life insurance, a beneficiary is the person or entity you select to receive the proceeds of your policy or any remaining benefits upon your death. It is important to carefully choose your beneficiaries and keep this information up to date, as it ensures that your benefits will be transferred according to your wishes.

Now, when it comes to witnesses, there are certain restrictions on who can fulfil this role. A witness to your signature on life insurance documents must be a "disinterested person", meaning someone who is not listed as a beneficiary on your certificate. In other words, the witness cannot be someone you name on the form as receiving benefits. Additionally, the witness must be an adult over the age of 18 and must provide their signature and address. It is also recommended that the witness be someone you know personally, as they can better serve as a witness should the designation be contested in a court of law.

In summary, a witness to your signature on life insurance documents cannot be a beneficiary, must be an adult over the age of 18, must provide their signature and address, and ideally should be someone you know personally.

What is a beneficiary?

A beneficiary is a person or entity that receives the benefits of a policy or account, typically in the form of a monetary distribution, upon the original owner's death. They are designated by the owner of the policy or account, and the owner can be specific about who they choose and how they want the benefits to be distributed. For example, the owner might choose to split the benefit among multiple beneficiaries, as long as the total percentage adds up to 100%.

Beneficiaries are often family members, such as a spouse, children, or parents. However, they can also be charities or trusts, such as one set up for minor children. It is important to note that beneficiaries designated for financial accounts override any beneficiary listed in a will.

There are two types of beneficiaries: primary and contingent. A primary beneficiary is the first in line to receive the benefit, while a contingent beneficiary will only receive it if the primary beneficiary is no longer living or cannot be located.

It is not mandatory to name a beneficiary, but it is usually the reason people buy life insurance—to provide for the people they care about. If no beneficiary is named, it may be unclear who is entitled to the funds, which can delay payment and result in the funds being held in probate.

Beneficiary designations should be reviewed and updated regularly, especially after significant life changes such as marriage, the birth of a child, divorce, or the death of a loved one.

What is a contingent beneficiary?

A contingent beneficiary, also known as a secondary beneficiary, is a designated backup to the primary beneficiaries named on a life insurance policy. When you pass away, if all your primary beneficiaries have also passed away, your contingent beneficiaries will receive the payout. When purchasing life insurance, you will be asked to designate at least one primary beneficiary, and it is also recommended that you name at least one contingent beneficiary.

The primary beneficiary is first in line to receive the death benefit proceeds. If you list more than one primary beneficiary, the proceeds will be split evenly, unless you indicate specific percentages for each beneficiary. A primary beneficiary can be an individual, a trust, or another legal entity.

A contingent beneficiary will only receive the death benefit proceeds if none of the primary beneficiaries are living at the time of your death, or if they refuse to accept the proceeds. It is a good idea to name a contingent beneficiary to ensure that your death benefit proceeds do not become payable to your estate, where they may be subject to probate, estate taxes, or be escheated to the insured's resident state.

You can name as many contingent beneficiaries as you like and portion out your estate in any ratio you wish, as long as the result adds up to 100%. You can also appoint an organisation rather than an individual as a primary or contingent beneficiary.

It is important to keep your beneficiary choices up to date, and to review them annually. Consider changes in marital status, deaths, or other life changes that may impact your beneficiary designation, and update accordingly.

How to name a beneficiary?

Naming a beneficiary is an important part of owning life insurance. Here are some steps to help you through the process:

• Understand the different types of beneficiaries: primary and contingent. A primary beneficiary is the person or entity first in line to receive the death benefit from your life insurance policy. Typically, this is your spouse, children, or other family members. Contingent beneficiaries, also known as secondary beneficiaries, are those who receive the death benefit if your primary beneficiary dies before or at the same time as you.
• Identify who you want to name as your beneficiary. This can be a person, a charity, a trust, or your estate. If you are unsure, consult a financial professional or attorney for guidance.
• Be specific when naming your beneficiary. Provide their full legal name, relationship to you, and any other relevant information such as mailing address, email, phone number, date of birth, and Social Security number. This will help the insurance company verify and locate your beneficiaries if needed.
• Check your state's laws before naming your beneficiary. Some states may require you to list your spouse as your primary beneficiary and designate them to receive a certain percentage of the benefit.
• Keep your beneficiary designations up to date. Life changes such as marriage, children, or divorce may affect your choice of beneficiary. Review your beneficiary designation periodically to ensure it still reflects your wishes.
• Submit the necessary forms to designate your beneficiary. Most financial services companies provide forms or websites for you to designate your beneficiary. If you have life insurance or retirement accounts through your employer, they may keep your beneficiaries on file for all employee benefits.

Frequently asked questions