My Bank As a Beneficiary
- Thread starter LenM
- Start date
I think you can name anyone you want to as beneficiary but why would you want to do so?
- 15,041
Why?
Generally you have the bank put an irrevocable assignment on the policy for the loan in question. Once the loan is paid off, then they release the assignment.
Generally you have the bank put an irrevocable assignment on the policy for the loan in question. Once the loan is paid off, then they release the assignment.
- 15,041
That is true, although I can't being to think of any other reason to put a bank as a beneficiary.
- 11,995
They need to have insurable interest. A loan would work, but I think am underwriter might not look to hard for loan info.
- 15,041
I see the original post has been edited. I still ask why.
The owner generally has the right to name whomever as beneficiary. I have seen fraternals refuse certain beneficiaries if it violates the fraternal rules and there are some public policy restrictions on beneficiary designations (non-spouse in communal property state without consent, funeral homes, etc.).
So I suppose you can. That said, I'm not sure the bank would accept the money. Without some reason, loan, contribution to a fund (memorial, scholarship, etc.) or something along those lines, they may refuse to accept it in which case it would go to the contingent beneficiary or if none was designated then the insured's estate (assuming the insured was the owner).
So in short, yes you probably can. I would ask the company to make sure they would accept the designation and I would also ask the bank to ensure they will accept the money.
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Only at time of issue. Insurable interest is generally not needed post issue. Also, how some companies define insurable interest if the insured is the owner is very, very loose. To paraphrase one company, "If the insured is the owner, they can name whoever they want, we don't care."
The owner generally has the right to name whomever as beneficiary. I have seen fraternals refuse certain beneficiaries if it violates the fraternal rules and there are some public policy restrictions on beneficiary designations (non-spouse in communal property state without consent, funeral homes, etc.).
So I suppose you can. That said, I'm not sure the bank would accept the money. Without some reason, loan, contribution to a fund (memorial, scholarship, etc.) or something along those lines, they may refuse to accept it in which case it would go to the contingent beneficiary or if none was designated then the insured's estate (assuming the insured was the owner).
So in short, yes you probably can. I would ask the company to make sure they would accept the designation and I would also ask the bank to ensure they will accept the money.
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Only at time of issue. Insurable interest is generally not needed post issue. Also, how some companies define insurable interest if the insured is the owner is very, very loose. To paraphrase one company, "If the insured is the owner, they can name whoever they want, we don't care."
- 11,995
No doubt, but it sounds like they're speaking about getting a policy for this purpose vs an existing policy.
- 2,908
A beneficiary does not need to have an insurable interest. The owner of the policy needs to have an insurable interest. Not the beneficiary.
If I want to take out a policy on myself tomorrow and name the local Humane Society as a beneficiary, the issue of insurable interest does not into come into play for the Humane Society and I do not need their permission to do so. Again, the reason being that they are a beneficiary- not the owner. They are free to accept or not accept the funds if they want when the pay-out occurs.
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- 11,995
Humane Society is a different thing, that's a charitable donation. Underwriters sometimes take issue with listing a girlfriend as a beneficiary so frequently girlfriends get upgraded to fiances.
Coincidentally, the Commonwealth of Virginia is very clear about this point Code of Virginia § 38.2-301 - Insurable interest required; life, accident and sickness insurance :: Chapter 3 - Provisions Relating to Insurance Policies and Contracts :: Title 38.2 — INSURANCE. :: 2006 Code of Virginia :: Code of Virginia :: U.
Feel free to point to another source, but the insurance interest requirement is on the beneficiary. I'm sure folks actively selling life insurance can also tell their stories of situations where underwriters kick policies back on this point.
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