As a valued Beneficial policyowner, we would like to make you aware of some important legal matters that may affect you. This booklet provides an overview of some of these legal matters. For further information and clarification, contact a Benefits Service representative.

General Guidelines

Legal change forms, such as Ownership Change Request, Beneficiary Change Request, and Assignment of Life Insurance Policy as Collateral, are available on the Beneficial Financial Group Web site, www.BeneficialFinancialGroup.com, under the Policy Forms link. Be sure to use the proper form and the most current version of all forms. Proper completion of all sections of the forms will allow for prompt and accurate processing.

Please follow these guidelines when requesting legal changes to a contract:

• Many of our legal change forms have multiple pages. Be sure to complete and return all pages.
• Provide the current policy number. If the policy has been upgraded or reissued, provide the number of the new policy.
• Forms must be signed and dated under the authorization section.
• Contact a Benefits Service representative if you have any questions about a legal change form

Designating Owners and Ownership Changes

Changes in a policyowner’s personal life may create the need to change the ownership of the policy.

POLICYOWNER
The policyowner is the person or entity who owns an insurance policy or annuity and has contractual rights. The policyowner does not have to be the person who is insured or who pays the premium, except on a tax-qualified annuity.

MULTIPLE POLICYOWNERS
The client may name multiple policyowners. All policyowners must act jointly on all policy transactions, however, and all their signatures are required on any documents that change the policy. They must also be named as beneficiaries in the same proportion as their ownership to avoid Goodman Rule problems. Name multiple owners with great care.

CONTINGENT OWNERS
Contingent owners should be named on a policy when the owner is different from the insured. Without contingent (secondary) owners, ownership rights may become uncertain if the owner dies. If an owner dies and a contingent owner has been named, the only requirement to transfer ownership is proof of death. If there is no contingent owner on a policy, the insured or annuitant may become the owner. Naming a contingent owner prevents a minor from becoming the owner of a policy. If a minor becomes the owner of a policy, court involvement may be required in the management of the policy.

NON-NATURAL PERSON OWNERS
The client may name multiple policyowners. All policyowners must act jointly on all policy transactions, however, and all their signatures are required on any documents that change the policy. They must also be named as beneficiaries in the same proportion as their ownership to avoid Goodman Rule problems. Name multiple owners with great care.

TRUSTS AS OWNERS
When a trust is named as an owner, the name of the trust, the date of the trust, and the name(s) of the trustee(s) should be recorded. If the name and date of the trust are not provided, the form will be returned.

MINORS AS OWNERS
Naming a minor as the owner of a policy can cause difficulties in any transactions with the policy and is therefore discouraged. Where a minor is definitely intended to be the owner of a policy, it is advisable to use the local Uniform Transfers to Minors Act, under which a custodian is named to act on behalf of the minor. The following wording should be used in the ownership designation: “(custodian’s name) as custodian for (minor’s name) under the Uniform Transfers to Minors Act.” There is also a specific form available that will assist you in listing this designation. Please contact the Benefits Department to obtain this document.

OWNERSHIP CHANGES UNDER DIVORCE
Depending upon the laws of each state, a divorce may or may not automatically change either the ownership or the beneficiaries of the policy. To avoid confusion and uncertainty, the owner of the policy should sign transfer of ownership forms transferring the policy to the new owner (usually the other spouse) if required to do so by the divorce decree. Ownership and beneficiary issues should always be explicitly discussed in the divorce decree. From time to time, a policyowner sends in a divorce decree that states who is to be the owner (typically, the non-insured spouse) of an insurance policy. Failure to act in accordance with such a decree could lead to legal challenges regarding the court-ordered rights of the transferee. Questions about handling transfers of policies in divorce may need to be reviewed by our Legal Center for determination of how to proceed. The rights of the parties established in a divorce decree cannot be ignored.

GOODMAN RULE
An understanding of the Goodman Rule is helpful in ownership and beneficiary changes. The result of the Goodman Rule is that for life insurance and annuities, the owner must also be either the insured (annuitant) or the beneficiary. If the owner, insured, and beneficiary are three different persons, then the death of the insured results in the owner making a taxable gift to the beneficiary.

Completing the Ownership Change Request

Ownership change requests can be accessed and printed from the Beneficial Financial Group Web site. Or, if you prefer, we can send the forms to you.

SECTION I. POLICY IDENTIFICATION
Complete all information in this section.

SECTION II. NEW POLICYOWNER DESIGNATION
Complete new owner and contingent owner information.

SECTION III. BENEFICIARY DESIGNATION
Note: When changing ownership, all prior beneficiary designations are revoked. New beneficiaries must be named by the new owner. Even if the new owner wants the same beneficiaries as the previous owner, do not leave the new beneficiary section blank. Complete all requested information for new primary and contingent beneficiary designations.

SECTION IV. AUTHORIZATION
The previous policyowner(s) and new policyowner(s) must sign the form. In community property states, the spouse must also sign the form. Signatures must be dated.

Designating Beneficiaries and Beneficiary Changes

A beneficiary (or beneficiaries) should be designated in each insurance contract. The beneficiary is named on the application for the policy and can be changed at any time during the lifetime of the insured.

DEFINITIONS

Beneficiary: The beneficiary is the person named to receive the death benefit proceeds upon the death of the insured. The beneficiary is named on the application but may be changed at any time unless the beneficiary is an irrevocable beneficiary. The interest of any beneficiary is subject to the rights of any assignee.

Contingent Beneficiary: We suggest that contingent (secondary or alternate) beneficiaries be named. Without a contingent beneficiary, funds may be paid to someone unintended. For example, if a husband names his wife as beneficiary and they both are killed in an accident, the proceeds may go to the husband’s estate rather than to the children.

Revocable Beneficiary: A revocable beneficiary can be changed at any time by submitting a Beneficiary Change Request form.

Irrevocable Beneficiary: An irrevocable beneficiary cannot be changed without the beneficiary’s consent. If an irrevocable beneficiary refuses to sign a consent form allowing you to remove him or her from the policy, the beneficiary designation cannot be changed.

Per Capita: A per capita beneficiary designation is a method of dividing benefits by head or by individual, to share equally among survivors. This means that if beneficiaries A, B, C, and D are named, and C dies, then A, B, and D each get 33.33 percent rather than C’s 25 percent going to his or her children.

Per Stirpes: A per stirpes beneficiary designation is a method of dividing benefits among living members of a class of beneficiaries and the descendants of deceased members. This means that if beneficiaries A, B, C, and D are named, and C dies, his or her percentage goes to his or her children rather than being split among the surviving beneficiaries A, B, and D.

DEATH OF BENEFICIARY

Unless stated otherwise, all rights of a beneficiary end if he or she dies before the insured. If the primary beneficiary dies, the proceeds are payable to the secondary or contingent beneficiary if one has been named. Many of our policies provide a minimum time period that the beneficiary must survive after the death of the insured. For example, many policies state that if the beneficiary dies at the same time as the insured or within 15 days after the insured, the beneficiary will be treated as having died before the insured.

RIGHTS OF SURVIVORSHIP

Unless specifically provided otherwise, Beneficial Life’s Beneficiary Change Request form provides for rights of survivorship among beneficiaries of the same rank. Our form states, “Beneficiaries of equal rank shall share equally unless otherwise stated.” This means that our forms provide that if beneficiaries A, B, C, and D are named, and C dies, then A, B, and D each get 33.33 percent rather than C’s 25 percentage going to his or her children. If this is not how you want the beneficiary designation administered, it must be specifically stated otherwise.

BENEFICIARY DESIGNATIONS

When making a beneficiary change, be sure that it is done accurately, because most problems do not manifest themselves until many years later. Contact your agent or the Benefits Department for assistance, if needed.

1. The names of spouses should be given. “Mrs. John Doe, wife” is not sufficient.
2. Children’s names, addresses, birth dates, and Social Security numbers should be included, rather than merely a designation of “children of the insured.” Group designations are appropriate, but additional information up front is helpful.
3. If a minor is named as beneficiary, any death proceeds will be left at interest without right of withdrawal until the minor has reached legal age (18–21 years old, depending on the state). A custodial designation, provided under a jurisdiction’s local Uniform Transfers to Minors Act, allows the client to choose an individual that will manage his or her child’s property. To set up a custodian under the Uniform Transfers to Minors Act, the following wording should be used in the beneficiary designation: “(custodian’s name) as custodian for (minor’s name) under the Uniform Transfers to Minors Act.” There is also a specific form available that will assist you in listing this designation. Please contact the Benefits Department to obtain this document.
4. If a trust is named as beneficiary, you will need to provide the following information: (a) the name of the trust, (b) the date of the trust, and (c) the name(s) of the trustee(s) of the trust. For example, John Doe, Trustee of the John Doe Family Trust, dated (or executed) January 1, 1999.
5. In community property states (AZ, CA, ID, LA, NM, NV, TX, WA, WI), unless named as the beneficiary, the spouse must also sign a Beneficiary Change Request form. An exception may be made if the owner provides evidence that the policy is separate property. The naming of a beneficiary other than the spouse in a community property state will not defeat the spouse’s one-half community interest.
6. If there is more than one beneficiary and the proceeds are to be distributed in unequal amounts, use percentages rather than dollar amounts. For example, on a $100,000 policy, use 22 percent and 78 percent rather than $22,000 and $78,000. The reason for this is if there is a loan, assignment, withdrawal, etc., there might not be a full $100,000 in the policy.
7. Make sure the beneficiary’s relationship is stated.
8. If the beneficiary is a trust, partnership, or corporation, provide the full legal name of the entity and the state of domicile (e.g., a Nevada corporation). The beneficiary designation must be signed by authorized individuals.
9. If a funeral home is named as a beneficiary, add the statement “as its interest may appear.” This will limit the amount payable to the funeral home to the amount of the bill for services. List a contingent beneficiary to receive the balance of the death benefit. The same approach may be used in other circumstances, such as naming a creditor as a beneficiary.
10. Make sure that contingencies are addressed. As you review a beneficiary designation, ask yourself if there is any possible way to misunderstand what is being designated.
11. Be aware that depending on the laws of each state, a divorce may or may not automatically change either the ownership or the beneficiairies of the policy.

Completing the Beneficiary Change Request

Beneficiary Change Requests can be accessed and printed from the Beneficial Financial Group Web site. Or, if you prefer, we can send the forms to you.

SECTION I. POLICY INDENTIFICATION
Complete all information in this section.

SECTION II. BENEFICIARY DESIGNATION
Individual as beneficiary:
Name primary and contingent beneficiary(ies). Be sure to include full name, address, Social Security number, date of birth, and relationship to the insured.

If more than one beneficiary is named, indicate the percentage of benefit or equal interests, and designate how the proceeds are to be administered (i.e., per capita or per stirpes).

Trust as beneficiary:
Indicate whether the trust is the primary or contingent beneficiary by checking the appropriate box. Provide the name of the trust, the date of the trust, and the name(s) of trustee(s) of the trust. If a trust is the owner, all trustee(s) must sign, unless the trust provides otherwise.

Business as beneficiary:
Indicate whether the business is the primary or contingent beneficiary by checking the appropriate box. Provide the full business name, address, company officer name, and title. The beneficiary designation must be signed by authorized individuals.

SECTION III. AUTHORIZATION
The policyowner(s) must sign the form. In community property states, the spouse must also sign the form. Signatures must be dated.

Frequently Asked Questions
Q. When completing an Ownership Change Request form, do I need to designate new beneficiaries?
A. Yes, when changing ownership, all prior beneficiary designations are revoked. New beneficiaries must be named by the new owner. Even if the new owner wants the same beneficiaries as the previous owner, do not leave the new beneficiary section blank.

Q. When completing an ownership change, can I designate that the beneficiary is to remain the same rather than designating new beneficiaries?
A. No. As explained in the answer to the previous question, when changing ownership, all prior beneficiary designations are revoked. New beneficiaries must be named by the new owner. Even if the new owner wants the same beneficiaries as the previous owner, do not designate “the same” in the beneficiary section.

Q. Should I name a contingent owner?
A. It is always a good idea to name contingent owners on a policy. Without contingent (secondary) owners, ownership rights become uncertain if the owner dies. This is particularly troublesome when the spouse of the owner thinks she or he becomes the owner of the policy when the policy transfers such ownership to the insured. If an owner dies and a contingent owner has been named, the only requirement to transfer ownership is proof of death.

A contingent owner or UTMA (Uniform Transfers to Minors Act) custodian should always be named when the insured is a minor. If there is no contingent owner on a policy, the insured or annuitant may become the owner. Naming a contingent owner prevents a minor from becoming the owner of a policy. If a minor becomes the owner of a policy, court involvement may be required in the management of the policy.

If the insured is the owner of the policy, there is no need to name a contingent owner.

Q. Can I designate a beneficiary to receive specific dollar amounts?
A. If there is more than one beneficiary and the proceeds are to be distributed in unequal amounts, use percentages rather than dollar amounts. For example, on a $100,000 policy, use 22 percent and 78 percent rather than $22,000 and $78,000. The reason for this is that if there is a loan, assignment, withdrawal, etc., there might not be a full $100,000 in the policy.

Q. Can I name a minor as a beneficiary?
A. Yes, but be aware that if a minor is named as beneficiary, any death proceeds will be left at interest without right of withdrawal until the minor has reached legal age (18–21 years old, depending on the state), unless a custodian is named under a jurisdiction’s local Uniform Transfers to Minors Act or a conservator for the minor is appointed by the court.

Q. What is the Uniform Transfers to Minors Act?
A. A jurisdiction’s local Uniform Transfers to Minors Act allows you to choose an individual that will manage your child’s property.

To set up a custodian under the Uniform Transfers to Minors Act, you will need to use the following wording in the beneficiary designation: “(custodian’s name) as custodian for (minor’s name) under the Uniform Transfers to Minors Act.” Or we have a specific form available that will assist you in listing this designation. Please contact the Benefits Department to obtain this document.