Report No. 82

5.9. Classes of beneficiaries-The Primary Beneficiary.-

There .are two main classes of beneficiaries primary and contingent1 - in the U.S.A. The applicant designates the beneficiary simply by stating in the application the name or names of the persons to whom he wishes the company to pay the benefit due at his death. He may specify that it be paid to one person alone, or that it be shared by several persons in proportions as he may indicate.2 These are the primary beneficiaries.

In the days when the policy was applied for and issued to the beneficiary, his rights under it were of such a nature that they became an asset in his estate in the event of his death prior to the death of the insured. In fact, even where the insured himself applied for any owned the policy, the beneficiary was often considered to have a vested interest subject to being divested. This created practical problems, particularly where the insured survived the beneficiary by many years, for the estate of the beneficiary might have been closed long before the insurance became payable.3 Yet the proceeds would still be payable to the estate.

1. Para. 5.11, infra.

2. Greider & Beadles Law and the Life Insurance Contract, (1968), pp. 144-145.

3. Greider & Beadles Law and the Life Insurance Contract, (1968), pp. 144-145.