One of the best things that can happen in life is having someone to love and who also loves you back. It is a great realization that out of the billions of people in the world, you can get to fall in with someone dear.
And as the relationship grows and deepens, couples go through the good and tough times in life. The romantic gives way to the practical, as couples in love may start to talk about money and plans for the future together.
And one of the ways of thinking ahead is taking out a life insurance policy and naming your beloved as a beneficiary.
This article is going to explore why this choice can be crucial in looking out for the person that you love, reasons behind in making such a choice, and the factors to consider in coming up with such a decision.
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Lover as a beneficiary of life insurance
Thinking about designating your girlfriend or boyfriend might feel a bit strange or uncomfortable at first. This topic may initially seem unusual, but it is a decision that holds profound implications for the security and well-being of those we cherish.
It is likewise an important choice with big effects on keeping the people you care about safe and happy.
When the insured passes away, the girlfriend or boyfriend as beneficiary can receive the proceed of the policy. It can be taken as a gesture of love, even beyond the grave.
But can a girlfriend or boyfriend, including same-sex / LGBT partner become a beneficiary?
The answer is yes.
This is so because a person securing their own life through a policy are allowed to choose anyone as beneficiary of a life insurance, and that can include a romantic partner, subject to exceptions set down by the laws. In Section 11 of the Amended Insurance Code (Republic Act No. 10607), thus, “The insured shall have the right to change the beneficiary he designated in the policy, unless he has expressly waived this right in said policy.”
To clarify, rules exist that spell out who cannot become a beneficiary. The Insurance Commission stated,
“… an individual who has secured a life insurance policy on his or her own life may designate any person as beneficiary provided that such designation does not fall under the enumerations provided in Article 739 of the Civil Code, without prejudice to the application of Section 12 of the Amended Insurance Code.”
Insurance Commission
So in Section 12 of the Amended Insurance Code, it says that “The interest of a beneficiary in a life insurance policy shall be forfeited when the beneficiary is the principal, accomplice, or accessory in willfully bringing about the death of the insured…”
Insurance policies are also covered by the Civil Code particularly those that are not explicitly provided by the Insurance Code.
And looking at Article 2012 of the Civil Code, it stated, “Any person who is forbidden from receiving any donation under Article 739 cannot be named beneficiary of a life insurance policy by the person who cannot make any donation to him, according to the said article.”
And Article 739 of the said law mentioned the following whose donations shall be void:
- Those made between persons who were guilty of adultery or concubinage at the time of the donation;
- Those made between persons found guilty of the same criminal offence, in consideration thereof;
- Those made to a public officer or his wife, descendants and ascendants, by reason of his office.
Revocable vs irrevocable beneficiary
Another thing to think about is designating your beloved as a revocable or irrevocable beneficiary. The difference between the two and their effect can be huge.
A revocable beneficiary can be added or removed to a policy. The disadvantage is that they have to pay taxes when they receive the death benefit.
An irrevocable beneficiary, meanwhile, is not charged with any tax when they get the proceed of a life insurance. However, any changes to the policy such as adding or removing beneficiary cannot be made without the consent of the irrevocable beneficiary.
Also, Section 11 of Republic Act No. 10607 stated that “…in the event the insured does not change the beneficiary during his lifetime, the designation shall be deemed irrevocable.”
Contingent beneficiary
An option is also available where a girlfriend or boyfriend is declared as contingent beneficiary or secondary beneficiary.
There are a few policies that will require family members as primary beneficiary and then only allow a girlfriend or boyfriend as contingent beneficiary.
What is the difference?
The difference is that primary beneficiaries stand first in line to receive an insurance payout. If all primary beneficiaries have passed away before the payout is given, only then that a contingent beneficiary can receive their share of the payout.
Filing for girlfriend or boyfriend as beneficiary
So how can you designate your beloved as a beneficiary?
Required documents may vary among life insurance companies. As mentioned earlier, some policies may require family members of the insured to be named primary beneficiaries while a girlfriend or a boyfriend is designated as a contingent beneficiary. Ask the insurer for specific details.
The following is a list of possible documents that may be asked.
- Certificate of No Marriage Record (CENOMAR)
- If there is a plan to get married: a declaration the partner as a fiance or fiancee / a letter of intent to marry
- If living together: proof of living together (i.e. residing in the same address or having the same billing address), Affidavit of Domestic Partnership / Affidavit of Cohabitation
- Joint bank account
- Proof of joint ownership of property
- Proof of business partnership