What most people take notice of when buying an insurance policy is how much it costs, the scope of the guarantee and other related content.
What most people take notice of when buying an insurance policy is how much it costs, the scope of the guarantee and other related content. They overlook, however, the importance of appointing a beneficiary and the appropriate arrangement thereof, waiting until after an accident before discovering that whether or not a beneficiary was initially appointed, and the way in which the appointment was made, has a big effect.
First Aviva reminds people that natural disasters both at home and abroad and personal misfortunes happen often; apart from wanting to guarantee ample personal protection, people must also pay attention to the appointment and arrangement of the beneficiary, in order for the insurance money to be given to those most in need - good intentions are of no benefit.
As First Aviva general manager Lin Yuan-hui explains, appointing a beneficiary is not restricted to just blood relatives or other relations. If the insured has no parents, spouse, children or siblings etc, they must explain to the insurance company the reasons why this is so and, after providing their ID card number and obtaining the insurance company’s approval, they can assign a non-related beneficiary. The appointed beneficiary is also not restricted to natural persons, but can also be legal representatives for public welfare organisations and the like.
Moreover, generally speaking, the different types of insurance for hospitalised medical treatment, disability through injury, general medical treatment, general disability, critical illness and all kinds of insurance for cancer sufferers, (not including insurance for death caused by cancer) etc, all take the insured as the beneficiary, because these kinds of insurance are mainly for protecting the insured against primary personal risks.
If the insured becomes totally disabled, however, the receiver of the insurance payout is decided on the level of capacity / incapacity that the insured suffers. If there is capacity, the insured can still be the sole beneficiary of the total disability insurance payout; if there is incapacity, the money can still be given to the insured, but will be managed on the insured’s behalf by the guardian, after the application for guardianship has been declared.
The pension beneficiary, for as long as the insured is alive, will invariably be the insured. For other death payouts, the beneficiary of the deceased will be the receiver.
Lin Yuan-hui points out that previously, if a beneficiary was not assigned to the insured, when the insurance money was given to the legal heir it would always have been subject to inheritance taxes.
These days, many insurance companies’ clauses or insurance contracts have been revised or clarified so that, if no beneficiary is assigned or in the situation of the appointed beneficiary having died, the insured’s legal heir not only becomes the beneficiary but, taking First Aviva’s insurance policy clauses as an example, if there is no appointed beneficiary and the legal heir receives the insurance payout from the deceased, there is no need for it to be subject to inheritance taxes. Therefore people should be reminded to take note of the following two points:
- When appointing a beneficiary, take note of the clauses of the insurance policy, and whether or not the insurance documentation includes clauses explaining this beneficiary matter.
- If the above-mentioned clauses are not present then a beneficiary should be appointed, and the order and proportions for several beneficiaries should be assigned at the same time. Only by adding the legal heir is it possible to avoid the payout being subject to inheritance taxes.
Lin Yuan-hui goes a step further to show that appointing a beneficiary differs to some extent in every insured’s situation, but that the same level of consideration is needed whatever the situation to ensure the insurance payout is given to those who need the most looking after, and that it is distributed in an order and proportion according to the living conditions of the beneficiaries, after the insured has passed away. Below lists ways to consider this point for four kinds of insured:
- Unmarried and childless: Because people in this group have no children or spouse, those who are dependent on their parents are recommended to give their parents priority as the beneficiaries when they pass away. If there is a long-term cohabitant that needs to be taken care of, the co-habitant can be made the sole beneficiary. In this case, as there are no relatives to consider, agreement must be obtained from the insurance company.
- DINKY (Double Income No Kids Yet): This is a married couple who has not yet had any children, therefore the spouse can have priority as the sole beneficiary of the deceased. If the deceased has been dependent on their parents, the parents can be added as beneficiaries, with amounts being distributed on the basis of the agreed order and proportions.
- Three generation family: People in this group have to look after their children, spouse and parents, so these beneficiaries can be arranged by order or proportions. If the children are still young, it is recommended that the spouse and parents take precedence. A trust fund can also be set up in order to avoid the situation whereby the child is unable to look after itself with the insurance money because it has no ability with financial matters, should both parents pass away.
- Single parent family: If an unmarried mother or head of a single parent family should pass away and the child has not yet reached adulthood, then civil law stipulates that the legal guardians can be the insured’s own parents and also the divorced partner. In this situation great attention must be paid to appointing a beneficiary in order to enable them to look after the child and protect the child’s rights to the best of their ability.
Another common problem is not changing the beneficiary in tandem with changes in life circumstances. For example, if the beneficiary is not changed after a husband and wife divorce, it is possible that the insurance payout may be given to one’s former spouse, and not the ones who most need looking after. Changing the beneficiary must also be done before an accident happens; if the insured waits until after the accident occurs then there is no way for the beneficiary to be changed.
Lin Yuan-hui therefore recommends people to, besides using their annual insurance policy review to confirm the beneficiary, also to consider anew the appointed beneficiary when marital status changes, parents pass away, the original designated beneficiary passes away, children are born or reach adulthood. By the insured and the applicant simultaneously signing their consent and applying in writing to the insurance company, the above example can be avoided.
| Types of insurance payout | Beneficiary |
| Hospitalised medical insurance, disability through injury insurance, medical insurance, disability insurance, critical illness insurance, all types of insurance for cancer sufferers (not including insurance for death caused by cancer). | The insured is invariably the beneficiary. |
| Total disability with injury insurance or life insurance cover. | Depending on whether the insured is incapacitated
|
| Pension payout. | Depending on whether the insured is alive or deceased
|
| Full term payout (savings insurance, capital repayment insurance). | If none has been appointed, the applicant is the beneficiary; otherwise the beneficiary is assigned based on the contract. |
| Death with life insurance, cancer insurance and injury insurance cover. | The beneficiary is assigned according to the contract of the deceased. |
-ends-
Press contacts:
Lu Hong-yi, First Aviva
Telephone: (02) 8758-1169
E-mail: johnson_lu@first-aviva.com.tw
Zhang Hui-fang, First Aviva
Telephone: (02) 8758-1067
E-mail: anna_chang@first-aviva.com.tw
Notes to editors:
About First Aviva
First Aviva is an insurance company jointly established by First Financial Holding Co, Ltd. and the Aviva Group.
First Aviva’s initial paid-in capital was NT$2.25 billion. First Financial Holding Co, Ltd holds a 51% share and the Aviva group 49%.
First Aviva has signed an exclusive bank insurance agreement with First Financial Holding Co, Ltd’s flagship subsidiary First Commercial Bank, offering life insurance, retirement planning and other insurance products through First Commercial Bank’s 190 branches in Taiwan, giving customers innovative products and services.
About the Aviva Group
- The Aviva group is the world’s fifth-largest insurance group (based on total global premiums on 31 December 2008). It is the leading provider of life insurance and retirement protection products in Europe, and also has an important position in other markets around the world.
- The Aviva group’s main areas of business include long-term savings (including life insurance protection, savings planning and retirement planning), fund management and property insurance. As of 31 December 2008 total sales were £51.4 billion, and more than £381.1 billion worth of assets were under its management (as of 31 December 2008).
- Aviva’s global media centre www.aviva.com/media contains images, company and product information and a press release database.
- In Asia, Aviva promotes its products and services through various marketing channels (including its own sales team, brokers and bancassurance). It has branches in Singapore, Hong Kong, mainland China, India, Sri Lanka, Malaysia, Taiwan and South Korea.
About First Financial Holding Co, Ltd and First Commercial Bank
First Financial Holding Co, Ltd was established on the stock exchange with First Commercial Bank as the flagship entity on 2 January 2003.
As of the end of 2008, First Financial Holding (Taiwan Stock Exchange stock code: 2892) held total assets exceeding NT$ 1.6 trillion, making it Taiwan’s seventh-largest financial group, providing comprehensive financial services to more than five million individuals and enterprises.
First Commercial Bank was established in 1899, and is the group’s main source of profits.
First Commercial Bank holds a leading position in the deposit and loans business, SME loans, home loans and fund sales markets etc. It has 190 service locations in Taiwan (including branches and offices) providing services to customers.