Colorado § 10-14-402 - Beneficiaries.

§ 10-14-402. Beneficiaries.

(1) The owner of a benefit contract shall have the right at all times to change the beneficiary in accordance with the governing documents of the society unless the owner waives this right by specifically requesting in writing that the beneficiary designation be irrevocable. A society may, through its governing documents, limit the scope of beneficiary designations and shall provide that no revocable beneficiary shall have or obtain any vested interest in the proceeds of any certificate until the certificate has become due and payable in conformity with the provisions of the benefit contract.

(2) A society may make provision for the payment of funeral benefits to the extent of such portion of any payment under a certificate as might reasonably appear to be due to any person equitably entitled thereto by reason of having incurred expense occasioned by the burial of the member. The portion so paid shall not exceed the sum of one thousand dollars.

(3) If at the death of any person insured under a benefit contract there is no lawful beneficiary to whom the proceeds shall be payable, the amount of such benefit, except to the extent that funeral benefits may be paid as provided in subsection (2) of this section, shall be payable to the estate of the deceased insured the same as other property not exempt; except that, if the owner of the certificate is other than the insured, such proceeds shall be payable to such owner.

Source: L. 93: Entire article amended with relocations, p. 598, § 1, effective July 1.

Editor's note: This section is similar to former § 10-14-107 as it existed prior to 1993.

ANNOTATION

Annotator's note. Since § 10-14-402 is similar to § 10-14-107 as it existed prior to the 1993 amendment to article 14 which resulted in the relocation of provisions, relevant cases construing that provision have been included in the annotations to this section.

Confinement of benefits to limited class is distinguishing feature of fraternal benefit insurance. One of the distinguishing features of fraternal benefit insurance from ordinary insurance is that the payment of death benefits in the former is usually confined to limited classes of persons. Rose v. Bhd. of Locomotive Firemen & Enginemen, 80 Colo. 344, 251 P. 537 (1926).

No one outside of the class designated is eligible as a beneficiary. Mund v. Rehaume, 51 Colo. 129, 117 P. 159 (1911).

Who are eligible as beneficiaries is determined by the laws of the state where the society is organized. Mund v. Rehaume, 51 Colo. 129, 117 P. 159 (1911); Rose v. Bhd. of Locomotive Firemen & Enginemen, 80 Colo. 344, 251 P. 537 (1926).

Beneficiaries take under policy and not by inheritance. A fraternal order, the death of a member in which entitles his surviving kin to certain benefits, is, for the purpose of determining who is entitled to the benefit, treated as a mutual insurance company, and the certificate of membership as a policy of life insurance, and, so far as possible, as the last will of the member. The policy measures the rights of the parties. The beneficiaries take thereunder and not by inheritance. Empire Ranch & Cattle Co. v. Jones, 51 Colo. 128, 117 P. 176 (1911).

Person named as beneficiary is presumed a legal one notwithstanding incorrect description by relationship. In the absence of proof to the contrary, the presumption is that the person named as beneficiary in a fraternal benefit certificate is a legal one, notwithstanding the description by relationship of the person designated is not strictly correct. The test is: Does she come within one of the eligible classes? Rose v. Bhd. of Locomotive Firemen & Enginemen, 80 Colo. 344, 251 P. 537 (1926).

Intent of insured in designating beneficiary is often sought. The intent of a member of a fraternal insurance society in designating a beneficiary in a certificate, like that of a testator, is often sought for in construing the certificate. Rose v. Bhd. of Locomotive Firemen & Enginemen, 80 Colo. 344, 251 P. 537 (1926).

Rights of beneficiary become vested on date of decedent's death. The rights of a party entitled to the fund under a fraternal benefit certificate become vested on the date of the decedent's death. Rose v. Bhd. of Locomotive Firemen & Enginemen, 80 Colo. 344, 251 P. 537 (1926).

Attempted change of beneficiary not made in prescribed manner is inoperative. As a general rule, an attempted change of beneficiary under a fraternal benefit certificate is inoperative if not made in the manner prescribed by the constitution and by laws of the association. Rose v. Bhd. of Locomotive Firemen & Enginemen, 80 Colo. 344, 251 P. 537 (1926).

A divorced wife may take as beneficiary. If a divorced wife has an insurable interest in the life of the husband, this will support a policy of insurance, and if she is dependent on him when he dies, e.g., for monthly payments of alimony, she is eligible to take as a beneficiary, although not then his wife. Rose v. Bhd. of Locomotive Firemen & Enginemen, 80 Colo. 344, 251 P. 537 (1926).