Life insurance is a crucial financial safety net for your loved ones in the event of your passing. However, when it comes to making a claim, things can get complicated, especially when a per capita is involved. In this article, we will explore what a per capita is and how it affects a life insurance claim.
Understanding a Per Capita
A per capita is a Latin term that translates to “by the head.” In the context of life insurance, it refers to the distribution of the policy proceeds among the beneficiaries equally. This means that each beneficiary receives an equal share of the claim amount.
How Does a Per Capita Clause Work?
When a life insurance policy includes a per capita clause, it means that if one of the named beneficiaries passes away before the policyholder, their share will be divided equally among the remaining beneficiaries. This ensures that the deceased beneficiary’s share is not lost but distributed to the surviving beneficiaries.
The Importance of Naming Secondary Beneficiaries
While primary beneficiaries are the first in line to receive the life insurance claim, it is crucial to name secondary beneficiaries. If a primary beneficiary passes away before the policyholder and there are no secondary beneficiaries, the per capita clause may not apply. In such cases, the policy proceeds may be subject to probate and distribution according to the laws of inheritance.
How to File a Life Insurance Claim with a Per Capita
When filing a life insurance claim involving a per capita, follow these steps:
- Notify the insurance company: Contact the insurance company and inform them about the policyholder’s passing.
- Gather necessary documents: Collect all the required documents, including the death certificate, policy documents, and beneficiary information.
- Complete the claim form: Fill out the claim form provided by the insurance company. Make sure to mention the per capita clause and provide details about the beneficiaries.
- Submit the claim: Submit the claim form and all the supporting documents to the insurance company.
- Follow up: Keep track of the claim’s progress and provide any additional information requested by the insurance company.
1. What happens if a primary beneficiary passes away before the policyholder?
If a primary beneficiary passes away before the policyholder, their share will be divided equally among the remaining beneficiaries as per the per capita clause.
2. Can I change the beneficiaries in my life insurance policy?
Yes, most life insurance policies allow you to change the beneficiaries. Contact your insurance provider for the necessary forms and procedures.
3. Are there any tax implications in a per capita life insurance claim?
In most cases, life insurance claims are not subject to income tax. However, it is always advisable to consult a tax professional for specific guidance.
4. Can a per capita clause be overridden?
In some cases, a per capita clause can be overridden if the policyholder explicitly states their wish for a different distribution of the claim proceeds. It is important to review your policy and consult with an attorney if you wish to make any modifications.
5. What happens if there are no named beneficiaries?
If there are no named beneficiaries, the life insurance claim proceeds may be subject to probate and distribution according to the laws of inheritance. It is crucial to name both primary and secondary beneficiaries to avoid such complications.