At this year’s National Convention, a change was made to the bylaw that applies to beneficiary designations. The bylaw can be found under Article II Membership…Insurance; Section 6; Beneficiaries. The change removes the redlined language below.
Article II Membership…Insurance
Section 6. Beneficiaries
a) The beneficiary or beneficiaries shall be designated in every certificate. Contingent or alternate beneficiaries may be named. In the event that two or more beneficiaries are designated and one or more thereof predecease the member, or perish in the same disaster with them, and there is no evidence as to which died first, or if one or more of the designated beneficiaries are unauthorized or disqualified by law or by these Bylaws to receive the benefits, and no new designations have been duly made by the member in the manner provided by these Bylaws, then the portion of benefits made payable to such predeceased or unauthorized or disqualified beneficiary shall be paid to the surviving beneficiary or beneficiaries, share and share alike.; provided that should such predeceased beneficiary be a child of the member, that portion of the benefit designated to such predeceased beneficiary shall be paid to their surviving child or children, if any, share and share alike.
Prior to this change, unless otherwise indicated, all beneficiary designations made on Western certificates were per stirpes. The benefit due to a named beneficiary who predeceased the insured automatically (as a default) became payable to that beneficiary’s child/children.
After the change, all beneficiary designations made on Western certificates are per capita. The benefit due to a named beneficiary who predeceases the insured will be split equally among the living beneficiaries, unless the designation specifically indicates as ‘per stirpes’ (no default).
To illustrate the effect of the Bylaw change, we will provide an example.
Betty Doe had a $10,000 life insurance policy with Western. She named her two children, Jane and Bob as her beneficiaries. She passed away on June 1, 2019. Betty’s son, Bob Doe, passed away on May 15, 2015. Jane Doe contacted Western to notify us of the passing and begin the death claim process.
Betty’s Beneficiary Designation
Primary Beneficiary: Jane Doe, daughter and John Doe, son.
Contingent Beneficiary: None
Before this bylaw change, we would have paid 50% to Jane Doe, daughter and 50% to John Doe’s children. John Doe’s portion of 50% would have automatically defaulted to being split equally among his children.
After this bylaw change, we will pay the benefit to the living surviving beneficiary(ies). The death benefit for this claim will be paid 100% to Jane Doe, daughter. We will only pay to the deceased beneficiary’s children if instructed according to the beneficiary designation.
To summarize, we can still pay a claim to the deceased beneficiary’s children, the only difference is that instead of it automatically being done as a default, we now need to have specific instructions at the time that the beneficiary designation is made. An example would be as follows:
Primary Beneficiary: Jane Doe, daughter (per stirpes) and John Doe, son (per stirpes).
Contingent Beneficiary: None
This method is more consistent with what is done in the financial services industry as a whole and more importantly, we are following our member’s specific instructions on how they would like their death benefit paid.
Western’s bylaws are a part of every contract issued and each certificate is administered according to the current bylaws. Therefore, as of July 18, 2019, all benefits for death that occur on or after that date, will be paid equally among surviving beneficiaries, unless otherwise specified. It may be a good time to review and make any necessary updates to your beneficiary designations. Please use the following resources for additional information regarding beneficiary designations:
Please add your bio info through your member profile page, or through your dashboard.
Call 877-935-2467 to speak with a Western Fraternal Life Representative.