Updated Dec. 19, 2019: You need a beneficiary for your life insurance policy. Most times your life insurance beneficiary will be another person.
This makes sense. After all, the whole point of life insurance is to provide financial support to loved ones after you're gone.
But what if your beneficiary tries to murder you? There can be hundreds of thousands of dollars on the line when it comes to life insurance, and we’ve all seen more than one true crime show about a husband or mistress dying, and oh look someone just happened to be the beneficiary of a million dollars. In a fishy-smelling situation, the beneficiary is always the main suspect.
Life insurance beneficiaries are a critical part of any policy and something you should choose wisely. So here are three surefire ways to tell if your beneficiary is trying to murder you and benefit from the death benefit.
They take out a huge life insurance policy on you
There are a lot of legitimate reasons why someone might take out a life insurance policy on you. They have to prove that they have an "insurable interest" – that is, your death would impact them in a way that life insurance would mitigate – but that covers a lot of people:
Business partners. Say you’re in business with someone. Whether it’s just the two of you, or you both play a vital role in a small-but-growing company, your death would probably affect the company. Your business partner can take out a policy on you to ensure that there’s enough cash to cover a transition period as the business adjusts.
Adult children. If you’re a grown child and your parents co-signed your student loans, they may take out a life insurance policy on you so they can cover that debt since it would transfer to them if you died. Life insurance can help financially provide for children if a parent dies, but sometimes the parent needs that protection.
Siblings. Do you take care of elderly and/or sick parents with your siblings? If one of you died, would the other be able to continue doing so alone? Without a sibling’s support, the survivor might need to transfer your parent to a facility or hire someone to help take care of them, and an insurance benefit could help shoulder the burden.
Partners. Probably the most common reason why someone would take a life insurance policy out on you: that "someone" is your partner, and they’re taking out a policy to protect your family. Whether you’re the sole breadwinner or a stay-at-home spouse who keeps up with the kids, your partner has an insurable interest.
If you're worried about one of these people becoming a murder, here's some things to keep in mind.
First, even though other people can take a life insurance policy out on you, you still have to sign the forms. So don’t consent unless you truly trust the person and they actually have insurable interest.
Second, take a look at how much the policy is worth. Calculate the life insurance need of the policyholder by looking at debt, expenses, and future plans. Since the policyholder should be someone whose life you’re fairly involved in, it shouldn’t be hard to at least ballpark this number. Then, compare the policy value with the insurance need.
Their internet search history is full of "slayer rule" lookups
The slayer rule "prohibits inheritance by a person who murders someone from whom he or she stands to inherit." That means that if your adoring husband stands to profit from your death, he’s out of luck if he decides to murder you (and is caught, obviously).
There are some interesting caveats, though. For the slayer rule to take effect, there doesn’t need to be proof beyond reasonable doubt or even a conviction. There are also different rules for different states; in Texas, there isn’t a slayer rule that’s as broad as in other states, but a person still can’t stand to inherit from their victim.
So check out your suspect’s browser history and see if they’ve been doing a lot of googling for slayer rules, and the applicable conditions in different states. If they’re a little too concerned about whether or not a murderer can receive money from their victim, they’re out to kill you (or they’re writing an informative-but-educational blog post on the topic).
They’ve already killed off your other beneficiaries
Did you know that you can have more than one beneficiary on your life insurance policy? If other beneficiaries start to die, it could serve as an early warning sign.
You can set up multiple primary or contingent beneficiaries in a few ways. You can name multiple beneficiaries with an equal stake in your death; four beneficiaries get 25% of the death benefit each. If one dies, they each get 33%, and so on, until only one remains (also known as the Highlander rule). This gives you ample time to realize something is up.
Or you can set up a primary beneficiary with secondary beneficiaries also named in the policy. The primary beneficiary gets the entire death benefit, but if they die, the benefit is split amongst the secondary beneficiaries. This puts a big target on your primary beneficiary’s back, and it probably wouldn’t be a bad idea for them to read this article, too.
You can also distribute the death benefit per stirpes, or by branch. That means your son and daughter get 50/50 stakes in the death benefit; if your son dies, his piece of the pie is split equally between his two kids, and so on.
If you have multiple beneficiaries who are dying under mysterious circumstances, look at any beneficiaries who are still alive. They could be working their way through their rivals like a video game character making their way to the final boss: you.
So ... what now?
Think your life insurance beneficiary is going to murder you? The good news is you can update your policy at any time to add or remove beneficiaries. In fact, it’s a good idea to sit down every year or two or when you have big life changes like when you get married, your kids have kids, or you’ve dispatched a former beneficiary who showed their hand too soon. It’s as simple as calling up your insurer.
Sure, a life insurance policy can put a target on your back. But for sociopath-free families it’s a critical piece of financial protection—well worth the risk. Visit our learning center for everything you need to know about finding a policy that’s right for you (and your sound-minded beneficiaries).
If you end up getting killed, you may wonder what happens next. We've got a guide for you.
Image: Alfred Gescheidt