CR214 Beneficiary nominations

Beneficiary nominations – splitting of beneficiary nomination – policyholder nominates his two daughters and himself in predetermined proportions – validity of


In terms of the insurance contract in this matter, the insurer undertook to give effect to written nominations of beneficiaries or changes in such nominations received by the insurer.

At the time the contract was entered into, the policyholder appointed his two daughters to each receive 50% of the proceeds of the policy on his death.

Some time later, however, whilst in the process of estate planning and in consideration of his specific circumstances at that time, the policyholder instructed his attorney, and provided the attorney with a written mandate, “to change the beneficiaries on my afore-mentioned policies”.

Acting on the mandate, the attorney notified the insurer in writing that the existing beneficiaries had to be changed in that each of his daughters were to receive a specified amount and that “the balance of the proceeds of this policy shall on the death of (the policyholder) be paid into his Estate”. The insurer responded that it could not comply with that request unless they were provided with the percentages of the shares for each nominated beneficiary. The insurer did not substantiate its contention that it was not possible to give effect to a beneficiary nomination in the form requested but the question became academic when the policyholder completed a further “Beneficiary Appointment” form in which the names of the two daughters and of the policyholder were inserted in the column headed “Full names and surnames of beneficiaries”. The share of the benefit each daughter was to receive was 7.4% and 85.2% was inserted next to the name of the policyholder himself.. During the investigation of this matter, the insurer provided us with a copy of a letter in which it stated:-

“Our records show that this policy is the property of Mr (the policyholder) therefore you cannot be nominated for any more roles on your policy.” According to the copy received, the letter was addressed to the policyholder at the address of the attorney. The attorney denies having received such letter.

In spite of having received written notification of the changes in respect of the beneficiary nominations, the insurer maintained that it was entitled to disregard the later notification and on the death of the policyholder it paid 50% of the proceeds to each of the daughters.

Prior to the actual payment to the daughters, the attorney who was previously involved in the notification of change of beneficiary, notified the insurer in his capacity as executor of the estate of the late policyholder, of the percentages due to the various beneficiaries in accordance with the notification of change.

In correspondence to the attorney and to this office, the insurer insisted that the notification of change was not effective as the policyholder could not legally nominate himself as a beneficiary together with his daughters. The executor of the estate requested payment to the estate of the amount in accordance with the percentage in the notification of change of appointment of beneficiaries.


The insurer’s contention that the policyholder could not validly appoint himself as a beneficiary could not be upheld in the light of the fact that it was patently clear from the correspondence that the policyholder’s intention was that the percentage for which the policyholder was nominated was to be paid to his estate on his death.

The insurer further sought to justify its payment to the daughters on the basis that the later change was not accepted by the insurer. Acceptance is not, however, a requirement for a binding nomination or change. The insurer agreed in advance in the policy that receipt of a notification of change by the insurer would be implemented.


After some further argument the insurer eventually agree to effect payment to the estate of the late policyholder of the percentage for which he/his estate, was nominated in terms of the notification.

May 2007