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  1. #1
    Join Date
    Feb 2020
    Posts
    1

    Default Who's Money is It

    My question involves insurance law for the state of: California

    Four siblings had a 20-year term life insurance policy for my father. One member ("Primary beneficiary") was responsible for making payments to the term policy while the other three would pay the "primary beneficiary" on a monthly basis. There is no other beneficiaries nor % splits. They are under the agreement that they'll pay one person and that person will pay the account and it will be split evenly at the end.
    They transitioned the 20-year term policy over to a whole life insurance policy after 10 years. At this time, their father was healthy and they didn't believe he would go any time soon. The transition from term to whole life would also not require another medical exam, so they all agreed to transition over to a whole life policy.
    5 years later (Year 15), their father passed away.
    The whole life policy was paid out and split evenly among the four siblings.
    What was discovered later and unknown to anyone was that the 20-year term policy had not been cancelled. There was only a verbal and no signature made to cancel the account, so it remained active. The primary beneficiary had unknowingly been soley paying it for the remaining 5-years.

    Questions:
    1) Is the primary beneficiary the sole beneficiary of the 20-year term policy?
    2) Are the other three siblings whom initially paid for the first 10 years of the 20-year term prior to transitioning over to the whole life policy owed any money given the fact they stopped paying 5-years ago?
    3) Do the other 3 siblings have any right to the 20-year term policy benefits?
    4) (Theoretical) If there was a 25% split between the 4 siblings, would the other 3 have a right to the benefits when they didn't pay for the last 5 years?

  2. #2
    Join Date
    Oct 2006
    Posts
    16,281

    Default Re: Who's Money is It

    Quote Quoting G81981
    View Post
    My question involves insurance law for the state of: California

    Four siblings had a 20-year term life insurance policy for my father. One member ("Primary beneficiary") was responsible for making payments to the term policy while the other three would pay the "primary beneficiary" on a monthly basis. There is no other beneficiaries nor % splits. They are under the agreement that they'll pay one person and that person will pay the account and it will be split evenly at the end.
    They transitioned the 20-year term policy over to a whole life insurance policy after 10 years. At this time, their father was healthy and they didn't believe he would go any time soon. The transition from term to whole life would also not require another medical exam, so they all agreed to transition over to a whole life policy.
    5 years later (Year 15), their father passed away.
    The whole life policy was paid out and split evenly among the four siblings.
    What was discovered later and unknown to anyone was that the 20-year term policy had not been cancelled. There was only a verbal and no signature made to cancel the account, so it remained active. The primary beneficiary had unknowingly been soley paying it for the remaining 5-years.

    Questions:
    1) Is the primary beneficiary the sole beneficiary of the 20-year term policy?
    2) Are the other three siblings whom initially paid for the first 10 years of the 20-year term prior to transitioning over to the whole life policy owed any money given the fact they stopped paying 5-years ago?
    3) Do the other 3 siblings have any right to the 20-year term policy benefits?
    4) (Theoretical) If there was a 25% split between the 4 siblings, would the other 3 have a right to the benefits when they didn't pay for the last 5 years?
    There generally is not a "primary beneficiary" of a policy. There can be one beneficiary or multiple beneficiaries but none of them would be considered to be primary. If a policy pays out to only one person, then the policy would generally have had only one beneficiary. Otherwise, the insurance company would cut a separate check to each beneficiary.

    So, you really need to know who is listed as a beneficiary on the policy in question. If its only the person that you call the "primary beneficiary" then legally, the money is solely that person's property.

  3. #3
    Join Date
    Mar 2013
    Posts
    18,033

    Default Re: Who's Money is It

    Quote Quoting G81981
    View Post
    Questions:
    1) Is the primary beneficiary the sole beneficiary of the 20-year term policy?
    2) Are the other three siblings whom initially paid for the first 10 years of the 20-year term prior to transitioning over to the whole life policy owed any money given the fact they stopped paying 5-years ago?
    3) Do the other 3 siblings have any right to the 20-year term policy benefits?
    4) (Theoretical) If there was a 25% split between the 4 siblings, would the other 3 have a right to the benefits when they didn't pay for the last 5 years?
    1 - The insurance company would pay the listed beneficiary. If "primary beneficiary" is apparently the only one listed that's the one who gets the money.

    2, 3, and 4. The other three are likely SOL if the beneficiary doesn't want to share because they apparently have no proof of the agreement in the first place.

    Who are you in this scenario?

  4. #4
    Join Date
    Nov 2013
    Posts
    6,945

    Default Re: Who's Money is It

    Quote Quoting G81981
    View Post


    They transitioned the 20-year term policy over to a whole life insurance policy after 10 years. At this time, their father was healthy and they didn't believe he would go any time soon. The transition from term to whole life would also not require another medical exam, so they all agreed to transition over to a whole life policy.
    5 years later (Year 15), their father passed away.
    Your sibling (primary beneficiary) did not transition to whole life. He/she took out a new policy. That is obvious because the term life policy survived.

    I would argue that since for 10 years out of 15 years that the term policy was in affect that the proceeds of the policy belong to all 4 siblings in a prorated division. Two thirds of the premiums were paid for by all 4. Therefore, two thirds of payout should be divided by 4 and one third of the payout goes to the primary beneficiary.

    Quote Quoting G81981
    View Post
    What was discovered later and unknown to anyone was that the 20-year term policy had not been cancelled. . The primary beneficiary had unknowingly been soley paying it for the remaining 5-years.
    How is it possible that your primary beneficiary did not know that they were paying for two policies?

    Someone is not telling the truth.

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