Posts tagged senior employees insurance

Who is entitled to receive the funds accrued in the deceased’s insurance policy? The inheritor or the beneficiary?


Most of the public is not aware that moneys set aside in the framework of policy arrangements such as provident funds, life insurance and senior employees insurance, pension funds and study funds, do not constitute part of a deceased’s person estate and are not divided after the death of a person in accordance with the Inheritance Law or in accordance with the deceased’s will.

The funds accrued by a deceased person in policies in his name will be transferred only to persons registered as beneficiaries in a specific policy and subject to the terms set forth in this policy.


The legal status of the funds accrued in policies

The public lack of awareness to the legal status of the funds that accrue in policies, and the fact that these funds are not part of the testator’s estate, sometimes causes many inadvertent mistakes when a person who drafts a will to his inheritors and believes that in that manner he divided all his property according to his will, however forgot that at the time of taking out the insurance policy he entered another person as a beneficiary of these funds. Under such circumstances the beneficiaries registered in the policies prevail over the will’s general instructions and the instructions set forth in the Inheritance Law and in that the purpose of upholding the deceased’s wishes is undermined.


Taking out an insurance policy before marriage

In the event a person took out an insurance policy before his marriage and before he had any children, and noted in the policy his parents or other relatives as beneficiaries, then, even though in accordance with the provisions set forth by law his wife and children are supposed to inherit him, then if most of his money is invested in the policy then only his beneficiary will enjoy this money.


“Taking control” over the testator’s policy

This legal situation is often exploited by entities that are aware that they are not entitled to inherit a certain person, and are interested in “smuggling” funds belonging to that person’s estate in favor of their own interests. For that purpose, they apply pressure on the testator, or convince the testator in another manner, to deposit his money in the policy wherein they are indicated as beneficiaries and in that they bypass inheritance laws and become the actual inheritors of that person.


Establishing beneficiaries in the policy

The meaning of depositing the funds of a deceased person in a policy wherein beneficiaries other than the inheritors are specified actually prevents the inheritors from using the legal protection granted to them by the Inheritance Law to protect their rights in the estate. For example, since a policy is not a will in essence, then its cancellation due to the same grounds that allow cancellation of a will cannot be demanded, such as allegations concerning undue influence on the deceased, or allegations concerning complete dependency of the deceased on the inheritors, or allegations concerning misunderstanding the will.

The Inheritance Law, invalidity of the will in the event an inheritor was involved in its making – invalid in policies

This is another important instruction in the Inheritance Law, prescribing that a will whose beneficiaries were involved in its making is null and void, and it does not apply to policies, and therefore it transpires that the involvement of the beneficiary in registering his name in the policy and even exerting influence and pressure on his behalf on the policyholder do not constitute grounds for removing his name as beneficiary in the policy.


An example of a legal case under discussion – abuse of provident funds

A classic example of abusing existing legal condition can be seen in the framework of a dispute between inheritors that is heard in the family court in Rishon LeZion in Family Case 2560/07, including abuse of provident funds, when one of the inheritors who asked to prevent the other inheritors from their share in the will exerted unfair pressure on the deceased to transfer most of his liquid cash to different provident funds wherein the name of that inheritor was registered as sole beneficiary while completely ignoring the other inheritors of that deceased.


Contradictory instructions by the deceased

Another problematic issue in this context rises when the deceased gives contradictory instructions as to the funds that are invested in policies in his name. For example, when the deceased names certain beneficiaries in his name, however in his will he specifies expressly that the beneficiaries of that policy will be other inheritors and does not report to the company holding the policy about changing the beneficiaries’ rights.


Legal precedent: the instructions of a will with respect to the instructions of a provident fund

Lately, the District Court of Jerusalem (Family Appeal 1030/06) made an important step in honoring the deceased’s wishes when it ruled that in the “competition” existing between the instructions set forth in the will and the instructions set forth in the provident fund the instructions set forth in the will prevail although there is no dispute that in these circumstances the inheritor refrained from delivering any notice to the provident fund concerning change of the beneficiaries’ identity.

In that the court preferred to adopt the inheritance-oriented approach that places emphasis on the obligation to uphold the deceased’s wishes, an obligation that was further strengthened after the enactment of Basic Law: Human Dignity and Liberty and transferring most of the weight in the direction of a person’s autonomy. The court notes that as we engage in the interpretation of a will it should be kept in mind that the only interest that is worthy of protection is the testator’s will.



In conclusion, in the Inheritance Law and the different instructions set forth in policies there are many breaches that may be to the detriment of the testator’s wishes. In order to prevent conflicts and uncertainties among a person’s inheritors, it is very important that the testator checks the other policies registered in his name at the time of drafting the will, and make arrangements so that there is no contradiction between the will he drafted and the details of beneficiaries in policies in his name.