2. Article 110, Paragraph 2 of the Insurance Act: “A Beneficiary Designated Under the Preceding Paragraph Shall Be Limited to a Person Who Is Alive at the Time the Insurance Amount Is Claimed.”

• In other words, for a beneficiary to have the right to claim the insurance proceeds, that beneficiary must be alive when the insured dies.
• The beneficiaries mentioned above include situations where legal heirs are designated as beneficiaries.
   

3. Article 112 of the Insurance Act: “Where the Insurance Amount Is Agreed to Be Paid to the Beneficiary Designated by the Insured Upon the Death of the Insured, Such Amount Shall Not Be Part of the Insured’s Estate.”

• When the insured dies, as long as at least one beneficiary is still alive, including where legal heirs are designated as beneficiaries, the death benefits will not be included in the insured’s estate, thereby achieving a tax-saving effect.
• Conversely, if all beneficiaries, including where legal heirs were designated as beneficiaries, die before or at the same time as the insured, the death benefits will be directly “inherited” by the legal heirs. Please note that this is acquisition through inheritance, so the death benefits must be included in the insured’s total estate.
  
  

4. Article 113 of the Insurance Act: “Where No Beneficiary Is Designated in a Death Insurance Contract, the Insurance Amount Shall Be Part of the Insured’s Estate.”

• Here, “no beneficiary is designated” refers to a situation where the insurance contract does not designate any beneficiary and also does not designate legal heirs as beneficiaries.
• It also includes situations where the beneficiary dies before or at the same time as the insured, with no contingent beneficiary and no separate designation of legal heirs as beneficiaries.
  
  

5. Case Analysis

• Ms. Chen had a daughter with her former husband. She later married Mr. Wang and had a son. In earlier years, Ms. Chen purchased a life insurance policy. Ms. Chen was both the policyholder and the insured, and she designated her daughter as the beneficiary.
• Later, while her daughter was in high school, the daughter unfortunately died in a traffic accident on the way to school. Many years later, before Ms. Chen passed away, she had forgotten to change the beneficiary. The insurance contract also did not contain a clause stating that “if the death beneficiary dies at the same time as or before the insured, unless the policyholder has separately designated another beneficiary, the insured’s legal heirs shall be the beneficiaries.”
• In other words, this was a case with no contingent beneficiary and no separate designation of legal heirs as beneficiaries, so Article 113 of the Insurance Act applies. Who, then, should receive the death benefits under this policy?
  • This policy would become a case with “no beneficiary.” As a result, the death benefits would become part of the estate of the insured, Ms. Chen
     
  • The death benefits would then be inherited equally by her spouse, Mr. Wang, and her son.
     
  • If the estate left by Ms. Chen had already exceeded, or was close to exceeding, the estate tax exemption plus deductions, forgetting to change the beneficiary of this policy could cause the death benefits to be included in the total estate, resulting in additional estate tax.
     

6. Conclusion