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Some people put a lot of thought into buying their life insurance.  Where many tend to fall short is putting thought into the protection of their beneficiaries.

What is a Beneficiary in Insurance?


A beneficiary is the individual or individuals that are named on the insurance policy. These are the persons or entity who the insurance company will pay. For the value of the life insurance to. Upon the death of the insured.

There are different rules when it comes to life insurance and beneficiaries. Throughout the provinces in Canada.

Rules for Designating a Beneficiary

  • The money to be paid out to the beneficiary goes directly to the named beneficiary.
  • The amount received from the payout is not taxable.
  • Creditors of the insured cannot touch the insurance proceeds paid to the beneficiary.
  • The value of the insurance is not included in the amount the estate is worth.
  • There is no probate conducted on the proceeds from the life insurance payout that goes to a beneficiary.
  • It is believed to be more difficult to contest a life insurance policy than it is to contest a will.
  • In most cases, the insurance policy gets paid out faster for a named beneficiary. Compared to a beneficiary named in the estate.

Types of Beneficiaries for Life Insurance

Preferred Beneficiary

A preferred beneficiary is usually a close family member. Such as;

  • Spouse
  • Parent
  • Child of the insured
  • Grandchild

Primary Beneficiary

There is an opportunity to list a primary beneficiary as well as a secondary. There are times where the primary beneficiary dies before the insured. In this case, the secondary beneficiary would receive the insurance proceeds. Upon the death of the insured.

Contingent Beneficiary

The contingent beneficiary is the same as a secondary beneficiary. Insurance companies can differ slightly in their terminology.

Who Can Be Named as a Beneficiary for Life Insurance in Canada?

  • Any adult or adults the insured wishes to choose.
  • Children can be named. But it is not recommended to name minors. Instead, a trustee should be named as the beneficiary. With the stipulation that the proceeds are to be held in trust. For the child intended to be the beneficiary.
  • Estates can be named as the beneficiary.
  • Charitable organizations can also be named as the beneficiary.

How is Life Insurance Paid Out to Beneficiaries?

For a beneficiary to receive the funds from the insurance proceeds, they have some tasks to fulfill. Each insurance company will have their own rules for this. There may also be specific rules per each province.

Producing Documents

The documents that have to be produced may also vary. It may depend on the amount of the value of the insurance policy.  Some examples of types of documents that may be needed are as follows:

  • The claim form as it pertains to the specific insurance company.
  • A certified copy of the statement of death.
  • Also, a certified copy of the Provincial death certificate.
  • A report in the form of a statement from the attending physician.
  • For minors, there will need to be a copy of the guardianship documents.

In addition to this, there may be other documents required. Each beneficiary should check with the insurance company for the exact documents required.

Additional Information

Aside from these documents the Life Insurance company may want more information. It will depend on the circumstances of the death.

Accidental Deaths

This will pertain to accidental death insurance. Which is sometimes part of life insurance. In this case, the insurance company will want all the details of the accident. Along with supporting information like news releases.

Death Outside of the Country

This is another instance where insurance companies are going to want more information. They are going to probably want;

  • The travel plans
  • Itinerary
  • Copy of travel tickets
  • A copy of the insured’s passport
  • How the deceased was returned to Canada
  • The cause of death
  • Any supporting documents to confirm the cause of death

How Does a Beneficiary Collect on the Life Insurance Policy?


Once the insurance company has all the necessary documents, they will do a review. To make sure that everything is in order with the policy. Then once they are satisfied, they will make a checkout. For the amount of the policy owing to the beneficiary.

Can a Life Insurance Beneficiary Be Contested?

Unfortunately, the beneficiary named on an insurance policy can be contested. There are different reasons why this can happen. In some cases, it can be more difficult to contest a life insurance policy. Part of this will depend on the designation of the beneficiary.

Revocable Beneficiary

When a beneficiary is classed as revocable, it means the policy owner can change the beneficiary. Without having to notify the beneficiary.

Irrevocable Beneficiary

For the policy owner to make any changes for this type of beneficiary they must notify them.

Contesting Life Insurance Beneficiary Canada

Contesting a life insurance policy in Canada is not an easy task. But, there are cases where this has been done and there have been valid grounds for doing so. Some individuals will contest a beneficiary because they think a fraud has been committed. Other times it has to do with child support issues.

No matter what the reason that a person is going to contest the payout,  a beneficiary will need to do so with the assistance of proper legal help. The insurance companies will automatically hand a dispute of beneficiaries over to the courts for them to determine the outcome.

Does a Will Override a Beneficiary Designation in Canada?

think carefully

When the beneficiary is named for a life insurance policy, it is separate from the will. The insurance company will have their own specific forms that will clearly outline who the beneficiary is. Some individuals may not name a beneficiary. Then the insurance proceeds become part of the estate. Now that money from the life insurance proceeds is subject to the rules of the estate.

There are a lot of potential technicalities that come with naming a beneficiary. There are a few steps that one can take that there will be no issues in the future;

  1. Think carefully about who you want to name as a beneficiary
  2. Consider the circumstances of the beneficiary. Based on this you may want to name a secondary beneficiary.
  3. Periodically check your life insurance policy to determine if you still want the same beneficiary name.
  4. You can discuss your life insurance beneficiaries with your estate lawyer.
  5. Put the policy in a safe place. Make sure that someone knows where these important documents are upon your death.

Any beneficiary that is running into difficulty with their claim should speak with legal professionals to assist them with this. Choosing the beneficiaries for your life insurance is just as important as choosing the right insurance.