Who is the beneficiary of life insurance? Designation and rights

Who is the beneficiary of life insurance?
Who is the beneficiary of life insurance?

Do you know who is the beneficiary of life insurance? At first glance it seems easy, it is the one who receives the compensation in the cases provided for by the life policy. It takes on special relevance as it is the person who receives the economic benefit that allows them to continue with their normal life after the death of the NPI number insurance holder; which on many occasions contributes a good part of the income of the family unit.

You should also know that there are no limits when it comes to setting beneficiaries and that anyone can be one, regardless of whether or not they are related to the owner of the insurance. But there is much more, keep reading to find out how this figure works!

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Who is the beneficiary of life insurance?

When contracting life insurance, a more logical option is to designate a beneficiary, the person or persons who will receive the economic benefit if the owner dies. We can choose anyone, it does not have to be a relative and it is not forever, we can change it at any time. As we will see later, we can choose to do it expressly, identifying the person or people who will receive the insurance with a name and surname, or to do it generically: children, mothers, father, spouse, etc. There is only one limit, if the amount to be distributed for the life insurance harms the legitimate interest of the heirs, they may request that this amount be part of their inheritance.

Designation of beneficiaries in life insurance

As we said, it must be taken into account that any person can have the condition of the beneficiary of life insurance, since it is the insured who designates it, regardless of whether they are related to the insured or not. The beneficiary can be a natural or legal person, the normal thing is the first, and can be designated in the two ways that we have advanced :

  • Express: when the beneficiary is identified with names and surnames in the case of a natural person or CIF or Company Name in the case of a legal person.
  • Generic: a specific person is not designated, but the degree of kinship is indicated (father, mother, children, grandchildren…).

How do I know if they gave me life insurance?

The fundamental right of the beneficiary of the life insurance is the collection of the economic benefit agreed in the policy, but he also has a series of obligations before receiving this perception.

Identification before the insurance company

To receive the benefit, the beneficiary must identify himself to the insurance company. If you appear as a beneficiary expressly in the policy, you will not have any problem, if not, you will have an additional procedure, present the corresponding designation of heirs made before a Notary, either because there is a will or because they are legally established after requesting a certificate of Acts of Last Will. We will see later.

Collection management

How do I know if they gave me life insurance? The answer is simple. The beneficiary can check the existence of any insurance to manage its collection. This public registry dependent on the Ministry of Justice can find all the necessary information so that the beneficiaries of life insurance can know if a deceased person had contracted this type of product, as well as obtain all the necessary information to be able to claim from the insurance company.

How is life insurance charged?

It is important to point out that it is not mandatory to designate a life insurance beneficiary, but doing so facilitates the work of collecting life insurance. When doing so, it can be done in two ways:

  • In the policy itself: it is the simplest and most common way. It can be done at the time of contracting, but it can also be designated or modified at any time of validity.
  •   In the will: designating beneficiary by policy, or in general for all those that are subscribed.

If there were no life insurance beneficiaries, it would be the heirs who would receive the outstanding capital.

The payment of taxes

But this collection is also subject to a fundamental obligation, the payment of taxes stipulated in this case by the Autonomous Community (the body that regulates Inheritance Tax) on the amount received. For all these reasons, correctly determining the beneficiaries of life insurance and making them aware of their rights and obligations, will allow them to better determine their benefits and objectives and, in the last step, make their collection more agile.

life insurance without a beneficiary

As we have anticipated, it is not mandatory to designate a beneficiary for life insurance. If so, the economic rights will be received by your heirs like the rest of your assets. But what steps does an heir have to take to collect it? We tell you.

Certificate of last wills first step is to obtain a certificate of last will from the deceased person. It can be requested in person at the central office for citizen attention or at the territorial offices of the Ministry of Justice or by mail or Internet. This will determine whether or not the deceased person made a will. If it did, it will determine how the inheritance is distributed (beyond the existing legal obligations of distribution), on the contrary, if there is no will, it will be necessary to go to a notary (if there is a degree of kinship) or to the court of the first instance (if there is no family relationship) to request a declaration of heirs.

Know the existence of life insurance

The second is to know the existence of life insurance. Surely, especially for more direct heirs, they can obtain information directly, either because they have the insurance contract or identify the premium payments. But not even in these cases can you be 100% certain of having all the information. To achieve this, as we have already mentioned, you only have to go to the Registry of Insurance Contracts with Death Coverage of the Ministry of Justice. You can do it in person, by mail, or online, identifying yourself as an heir to obtain all the information about the life insurance to which you will have some right.

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Contact the insurer

The third step is to contact the insurer. To do this, you must present the documentation by which we were designated as heirs that we explained in the first point, which must be accompanied by a death certificate of the insurance holder.

Pay the inheritance tax

The fourth step, mandatory to be able to collect life insurance, is to pay the Inheritance Tax corresponding to life insurance. Here it is necessary to take into account an important nuance. By definition, life insurance is not included in the rest of the hereditary estate, because it was never part of the estate of the deceased person, the right to collect arises precisely when death occurs. This would be the case if there was a designated beneficiary, but this is not the case in this case if it is integrated into the inheritance.

Of course, the Autonomous Communities, which are the ones with which the Inheritance Tax is settled, offer us an advantage, first making a partial self-assessment only for the amount of the tax. This means that, with a lower outlay than if we did it for the entire inheritance, we can get an amount of money in cash that often helps us pay the rest of the tax. It should not be forgotten that the term of total liquidation of this Tax is six months, counted from the date of death.

If you fulfill all these points step by step, you will not only be able to collect all the life insurance that you are entitled to as an heir by not designating beneficiaries but also do so more quickly and efficiently.

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