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Any carriers that will allow a beneficiary arrangement Per Stirpes, where the grandchildren will receive their parents portion of the death benefit? Instead of the other child getting it all.
Beneficiaries Per Stirpes
- Thread starter jacobtn
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I should have added, in case one of the children passes away before the client.
BIG one
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I think it's called a beneficiary change form once the parent passes away, I know not the answer you were looking for.
All companies act in this manner. As far as I know, it's standard law that it be paid out that way. In other words, let's say it was a 50/50 split between Grown Child A and Grown Child B. If Grown Child A dies, it doesn't revert back to Grown Child B, it goes to the survivor(s) of Child A.
BIG one
Expert
- 39
Todd that is the definition of per stirpes, unfortunately that's not the way it works without designating it on the app. This seemed more common back in the 80's and 90's I think they even used to have a box you could check. Not common these days but I believe you can still note per stirpes and the insurance company will take it, but I would definitely call beforehand, otherwise it all goes to the other beneficiary. You designate a beneficiary not a branch of the ol' family tree.
Most will allow it if you'd state per stripes in the beneficiary designation. Even when the client does not want a per stripes distribution, if there is more than one beneficiary with equal amounts, I put "share and share alike, all to the survivor (s)" just so there will be no confusion at claim time.
If I'm reading what you're saying correctly, you are saying that the other 50% (for example) would revert back to the other bene making it payable to the one bene at 100%?
If this is true, then the companies are doing it illegally. Keep in mind, we are not talking about a bene and contingent bene here.
Let me explain. If I take out a policy and I want 50% to go to my oldest child, and 50% to go to my only other child then that is exactly what the company will agree to do. Now, my oldest child dies before I do and I don't change to bene to 100% to go to my 2nd child, then the 50% to my 1st child still goes in that direction. If my 1st child had children, then they will automatically be the recipients of 50% of the death proceeds.
You see, the insurance company can't just change things on you like that. It has to be distributed to that branch of the tree.
Now, what if 1st child did not have any children or wife? It still has to be paid to the next closest of kin. In this case it may very well be the 2nd child. Either way, the insurance company has to do their due diligence to pay it out correctly.
If the first child had no children, it would be payable to that child's estate.. not closest kin.
And, unless you designate "all the the survivor' a per stripes designation is the default in most jurisdictions.
BIG one
Expert
- 39
Per Stirpes is always for the primary beneficiary, but I guess if all of them passed away then you could even do a per stirpes contingent, could happen I guess. But if you name 2 or 3 or however many kids as your primary beneficiary ( split equally or however you want it ), if one of your kids passed away it doesn't go to that beneficiaries family, it doesn't work that way, that share gets split between the other beneficiaries (I learned this watching the LIFETIME channel). Perfect example would be if you outlived all your beneficiaries and never changed them, when you pass away it does not go to the predeceased beneficiary's family members, we all know it goes to the estate of the insured. On the other hand if it was noted per stirpes each family would get an equal distribution and none of it would go to the estate in most cases. To take it a crazy step further, if the beneficiary passes away after the insured but before the death benefit is paid out it unfortunately goes to the beneficiaries estate.
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