Understand the outcome of the life insurance contract on the death of the insured

The death of the insured causes the termination of the life insurance contract. The capital present on the contract then goes to the beneficiaries designated by the subscriber. To recover them, these beneficiaries must contact the insurance company and provide all the documents requested. They have a period of 10 years to assert their rights.

In what form is the capital paid to the beneficiary(ies)?

On the death of the insured, the beneficiaries have the possibility of recovering the capital in three different forms:

• they can choose to pay in cash, by check or by bank transfer to their account. If the contract was denominated in units of account (units of UCITS), they will receive an amount equal to the counter-value of these units in euros;
• for unit-linked contracts, they can, if they wish, receive the securities directly. This payment will be made by transferring the UCITS units to a securities account opened in the name of the beneficiary.
In practice, this option is rarely exercised. It is interesting if the death of the insured occurs during a period of stock market decline:by keeping the securities, the beneficiaries can hope for a rise in prices, and then sell them at a better price;
• finally, some companies offer beneficiaries the opportunity to open a life insurance contract in their name. The capital is then directly transferred to this contract. In this case, entry fees are generally reduced and sometimes even waived.

The choice between these terms of payment is exercised individually by each beneficiary. In the presence of two beneficiaries, the first can opt for a cash payment while the second can decide to open a contract with the company.

What are the formalities to be completed by the beneficiaries?

On the death of the subscriber, insurers are not obliged to find the beneficiaries of a life insurance contract. As a result, they only pay out capital if someone claims it. If you are the beneficiary of a contract, it is therefore imperative that you contact the company.

In order to receive the capital, the beneficiaries are required to complete several steps which are described in the general conditions of the contract. These steps consist of sending the insurer a letter informing it of the death of the insured, then completing a supporting file. Items in this folder include two types of documents:

• on the one hand, documents concerning the deceased insured,
• on the other hand, documents concerning the beneficiary(ies).

Warning:" The sums of a life insurance policy not claimed 10 years after the death of the insured are paid to the Caisse des dépôts et consignation. They are therefore lost for the beneficiary" warns P. Catherinet, manager of the Cieleden website and specialist in the funeral insurance sector.

Documents relating to the deceased insured

The beneficiary must generally provide:

• an original death certificate or a copy thereof;
• a civil status card of the deceased or a copy of his national identity card;
• the signed subscription form of the contract as well as any amendments;
• the address of the tax office on which the deceased depended.

Documents relating to the beneficiary(ies)

The necessary elements are as follows:

• a document proving the identity of the beneficiary:civil status card or copy of the national identity card or family record book,
• the addresses of the beneficiary(ies),
• a letter from the beneficiary(ies) requesting payment of the capital and specifying the form in which they wish to receive this capital (cash, securities or transfer to a life insurance policy),
• a bank or postal account statement for each beneficiary,
• a sworn statement specifying the amount of tax relief already used for sums received from other insurers.

Moreover, if the beneficiary has been designated by will, he must provide a copy of this will to certify his status as beneficiary.

Gathering all the documents in the file is a tedious ordeal. However, it is an essential step to obtain payment of benefits as soon as possible. Indeed, the companies only pay the capital when they have all the supporting documents.

This test is made even more complicated in the presence of several beneficiaries. In this case, the insurers only pay the funds to each of the beneficiaries when they have in their possession the complete files of all the beneficiaries.