connected with the insured by ties of blood, marriage, business or finance; andThe Company will issue a policy only when the beneficiary (and the owner if other than the proposed insured) has an insurable interest in the Insured.
An insurable interest is presumed to exist when the beneficiary designated in the application is:
connected with the insured by ties of blood, marriage, business or finance; and
expects to derive support or other financial advantage or benefit from the continuance of the life of the insured.
It may also exist as a result of contractual obligations, such as business purchase agreements, deferred compensation, key-person situations, and creditor- debt repayment. Also, each individual has an inherent insurable interest in his or her own life.
Although it is impossible to list all situations in which an insurable interest may exist, the following situations are most common:
A person has an insurable interest in the life of their spouse.
A child has an insurable interest in the life of a parent if the child would lose financial benefit or incur tax or financial responsibility as a result of the death of the parent. This may also be true for other blood relationships and in certain situations where no blood relationship exists.
A parent has a limited insurable interest in the life of a child. Only under unusual circumstances does a relative other than a parent possess an insurable interest. The agent should furnish complete information in all such cases. In all cases, the signature of a parent or legal guardian must be obtained. Usually the parent should be named as beneficiary.
A creditor has an insurable interest in the life of a debtor. The amount of insurance must, however, bear a reasonable relationship to the amount of the debt.
Within a business, a partner or owner has an insurable interest in the lives of other partners or owners. Any party committed contractually to purchase a part or all of a business interest from an estate has an insurable interest in the life of an estate owner.
An employer may have an insurable interest in the life of a key employee.
A religious or charitable institution may have an insurable interest in the life of a contributor; the degree of insurable interest should be directly related to the degree of support during life.
If any doubt exists regarding insurable interest, submit the facts to the Home Office before writing the application.
The insured should be the owner of the policy unless there are clear, justifiable reasons why it should be otherwise. An owner must have an insurable interest in the life of the insured at the time the policy is issued. The owner has the sole and absolute power to exercise all policy rights and privileges without the consent of any persons unless the owner provides otherwise by written notice.
The rights of the owner include, but may not be limited to:
Right to change ownership
Request and receive a policy loan
Change the dividend option
Surrender the policy for cash
Change the beneficiary
Select an optional mode of settlement for the payment of the death proceeds
Transfer all or part of the ownership rights under the policy through an assignment.
If the owner is to be other than the proposed insured, the agent should write in the full given name of the owner (company or individual), relationship to the insured, date of birth (if an individual), and owner's nine digit Social Security number or taxpayer identification number.
The owner's insurable interest in the life of the proposed insured must be explained if the circumstances are at all unusual or unclear.
The Company does not normally allow an agent to be owner or beneficiary of a policy unless the policy is on the agent's own life or that of an immediate family member. A complete explanation of insurable interest must accompany all requests for exceptions.
The owner must sign the application. When the owner is a company or corporation, an officer of that company or corporation, other than the insured, must sign the application and include his/her title.
Various circumstances may dictate ownership by an individual other than the insured. These include business insurance, insurance on minors, divorce settlements or situations in which the person having insurable interest desires to maintain control of the policy.
When a Trust is named as the owner, the name of the trust, location, trustee and date of the trust or the trust number are required. In addition, a copy of the trust may be required and the cover page, first page, and signature page are required.
The Uniform Gifts to Minors or Uniform Transfers to Minors Acts (UGMA/UTMA) provide, in substance, that an adult person may during his lifetime make a gift of security or money (or life insurance in most states) to a minor by registering it in the name of, and/or delivering it to, the minor. In certain circumstances it may be registered in the name of an adult or trust company as custodian for the minor.
The appropriate wording in naming a custodian under this act as owner is:
"(name of custodian) for (name of minor) under the (name of state) Uniform Gifts to Minors Act."
The minor's estate must be the beneficiary, if the minor is the insured.
Special Note: Some states do not include annuities with life insurance policies; therefore, you should be familiar with your own state laws in this regard as well as other aspects of gifts to minors.
Naming multiple owners on Columbus Life policies is discouraged because of our policy provisions, but will be allowed when necessary. If joint ownership is necessary, a special amendment will be required. The amendment explains what would happen if a joint owner predeceases the insured.
Because of differences in dealing with contingency ownership, there are two Amendments for joint ownership:
Form CL 70.204* provides for the deceased co-owner's interest to pass to the surviving owner(s).
Form CL 70.205* provides for the deceased co-owner's interest to pass to his or her estate.
We encourage the use of CL 70.204.
All policy-owners' signatures are required for any withdrawals or changes. Any gain that becomes reportable will be divided among the policy-owners.
*Be sure to use the appropriate state variation of the forms listed above.
The Company will not normally permit a minor to own a policy.
If the owner is other than the insured, a contingent owner must be named (exception - if the owner is a corporation or corporate trustee, no contingent owner is necessary).
If there is no contingent owner designated and the third party primary owner predeceases the insured, ownership rights pass to the deceased owner's estate in the current policy series.
For questions relating to previous policy series, you should refer to the policy language and/or our Policy Service department.
If an estate is named as a contingent owner, there can be delays in the transfer of ownership because estates may take many months to settle.
Click here to see the Quick Reference Ownership Guide.
The beneficiary is the recipient of the proceeds of the life insurance policy at the time of the insured's death. The beneficiary designation should be kept current.
A policy will be issued only when the beneficiary has an insurable interest in the insured.
An insurable interest exists if the beneficiaries designated in the application:
are connected with the insured by ties of blood, marriage, business or finance.
expect to derive support or other financial advantage or benefit from the continuance of the life of the insured.
This type of beneficiary designation can be changed any time the owner wishes and does not require the consent of the present beneficiary.
Since change of beneficiary, policy loan, surrender or assignment cannot be made without the beneficiary's consent, this designation should not be used except in unusual circumstances.
When a life insurance policy is to continue following a divorce decree, and the proceeds are payable to the former spouse, the beneficiary designation can be made an irrevocable designation.
An agent of the Company should not be named as beneficiary of a policy unless there is a business or family relationship. The relationship to the insured should be indicated at the time of designation.
It is important that the beneficiary designation be clear. The full name and relationship to the insured should be given.
Example: Mary Smith, wife
Example: John Brown, business partner
A wife should never be referred to by her husband's first name or initial.
Example: Mrs. Tom Jones (should not be used.)
If the beneficiary is a charitable or educational institution, its address and tax identification number are required for identification purposes.
If proceeds are being split, percentages should be given, not dollar amounts. Policy values do change with time. Example:
50%—Mary Smith, wife
25%—John Smith, son
25%—Jane Smith, daughter
When there are living children at the time of the designation, they should be specifically named. Any future born or adopted children could be covered by a designation such as:
"John and Mary Smith, son and daughter, and any future born or adopted children of the insured."
To avoid any misunderstanding concerning the intent when naming children on a per stirpes basis, the following wording must be used:
"Insured's children in equal shares. If any child of the Insured pre-deceases the Insured, then the share that the deceased child would have received is to be paid in equal shares to the children by birth or adoption of said deceased child who survive the Insured. If there are no children of such deceased child surviving the Insured, the deceased child's interest in this policy shall terminate."
If the policy is owned by someone other than the insured, the policyowner should also be the beneficiary. If the owner and beneficiary are not the same, when the insured dies and the proceeds are paid to the owner's designated beneficiary, there is risk of gift taxation on the entire death benefit.
Generally, when a corporation or corporate trustee owns a policy, no contingent beneficiary should be designated.
A creditor, such as a bank, has an insurable interest in the life of a debtor. The amount of insurance, however, must bear a reasonable relationship to the amount of the debt. It must appear that the debtor will be able to repay if he/she lives.
If a creditor is named as beneficiary, the designation should include the wording "as interest appears," with the balance to a contingent beneficiary. A preferable way to handle this situation would be with the use of a collateral assignment.
Our individual life policies generally state that, if the beneficiary is the spouse of the insured, and both die and we cannot tell who died first, death proceeds will be distributed as if the spouse predeceased the insured.
"If the spouse of the insured is the beneficiary and there is not sufficient evidence of the order of death of the insured and beneficiary, the proceeds of the policy shall be distributed as if the beneficiary had survived the insured."
Currently, most states allow the naming of a custodian as beneficiary under the Uniform Gifts to Minors or Uniform Transfers to Minors Acts. When the minor is the insured and the policy is owned by the custodian for the minor, then the minor's estate must be the beneficiary. (Use the Quick Find above to jump to information about ownership.)
It is advised that the child first be named, and then the custodian in this type of designation.
Example: Susan James, daughter, if said child is a minor at the time any proceeds become payable then to Mary Williams, aunt, as custodian for Susan James under the Michigan Uniform Gifts to Minors Act.
In addition, Pennsylvania specifically allows the naming of a guardian to receive the proceeds for a minor.
Naming a guardian or custodian as beneficiary should be discouraged.
When a parent dies, legal guardianship of the child is normally determined in court. A guardian named in the parents' last will and testament will influence the court decision; however, there is no certainty that the person specified will be alive, deemed fit, etc. Litigation could result. There is also the probability that when the proceeds become payable the children will be grown and fully competent to receive the proceeds on their own account.
In the absence of a trust, if the applicant wishes his or her children to receive the proceeds of the life insurance, the best solution is to designate the children themselves as beneficiaries.
Requests immediately following issue to change the beneficiary to an individual with no apparent insurable interest will not be allowed. If it is determined that there is, in fact, insufficient insurable interest, we will cancel or rescind the contract with full premium refund. Therefore, changes of beneficiary right after issue should include details of insurable interest.
Designating the insured's will as the beneficiary is not an acceptable beneficiary designation. If the insured has a trust established within the will, then the testamentary trust should be designated as beneficiary. If the insured wants insurance or annuity proceeds paid to the estate, then the estate of the insured should be designated as beneficiary.
A trust is a legal arrangement under which one person (called a grantor, trustor or creator) transfers property to another person (called a trustee) on condition that the trustee hold and use the property for the benefit of the beneficiary who may be either the grantor or a third party. The wishes of the grantor concerning the administration of the trust, in regard to how the funds are to be invested, ways the income is to be paid and to whom, and the method by which the property is to be disposed of eventually are set forth in the legal instrument that creates the trust (called the trust agreement or deed of trust).
Inter vivos or living trusts come into existence during the lifetime of the insured. The designation should be specific when naming a trust as beneficiary, and must include the name of the trust and trust number or trust date. Additional helpful information is the trustee's name and reference to succeeding trust, if there is one. Several examples of appropriate wordings for these designations are:
The John Brown Trust dated January 1, 1983, Trust No. 5954.
The Huntington Bank of Columbus, Trustee, under a Trust Agreement No. 5954 with John Brown dated January 1, 1983.
Testamentary Trusts are created by a will and do not come into existence until after the grantor's death. The correct wording in naming this type of trustee beneficiary is:
"The Trustee(s) designated in and who duly qualifies according to the law under the Trust created by the Last Will and Testament of the Insured dated January 1, 1983. If, within (time period) from the Insured's death, the Company is not furnished written due proof of the appointment or qualification of such Trustee, payment will be made to the Executors or Administrators of the Insured."
Trust arrangements should, of course, be worked out with the insured's legal advisors.
When the beneficiary designation is extensive and cannot be completed in full on the application, a Change of Beneficiary form CL 70.84 should be used.
An assignment is a transfer of some or all of the rights of ownership made by one person known as the assignor, in favor of another, known as the assignee.
The procedure for making an assignment is the same when made at the time of original application for insurance or at a later date. Release of an assignment must be made in writing, signed by the assignee. Otherwise, the assignment is considered to be in effect.
An assignment made for the purpose of transferring all of one's ownership rights to another, irrevocably, is called an absolute assignment. A policy-owner gives up all exercisable rights by making an absolute assignment.
Absolute assignments are most often used in many older policies that do not allow a change of ownership. It is, in essence, the same as an ownership change, with one exception. The signatures of both the owner and the assignee are required when a change is requested.
Under a collateral assignment the policy-owner's rights are restricted. However, a collateral assignment normally assigns a specific amount or is used for a specific purpose. An assignment to secure a loan would be an example of a collateral assignment. The collateral assignee should not be named as beneficiary.
The Company uses commercial inspection services in evaluating the insurability of proposed insureds. Commercial inspection services develop information about employment, medical history, income and financial data, hazardous sports activity, driving, alcohol and drug use, etc. Guidelines for when Inspection Reports are required may be found in the “Underwriting Overview” on the Columbus Life Extranet.
The Compliance Department provides information and forms that apply to each state. You should have available and know those that apply to your state and the states in which you do business.
The appropriate information for each state is released to agents and general agents licensed in that state and is then included in the Initial Supply and Training Folder for new agents and general agents. All of the states in which the company is licensed EXCEPT the District of Columbia and North Dakota have replacement regulations (as of 12/31/2019).
In addition to the state required replacement forms, Columbus Life requires a ledger illustration whenever an existing policy of another company is being replaced with a Columbus Life universal life policy.
Columbus Life respects client's rights to privacy and we are committed to keeping client’s information secure.
Claim authorization form 45.406 or 70.370 must be signed and submitted with claim forms.
We require that a pre-notice be given and signed consent be obtained from a proposed insured before blood or other fluids are obtained for the purpose of testing for HIV antibodies. These requirements are based on the state of residence of the proposed insured. The consent form will normally be completed by the paramedical examiner.
Most paramedical facilities will fulfill these requirements as part of their blood draw service. However, the ultimate responsibility is yours.
Effective 4/1/2003 the federal Health Insurance Portability and Accountability Act went into effect.
What this act basically does is to require a special HIPAA authorization (form CL 45.406) before a doctor or medical facility can release medical records; it severely restricts what we can share or release to others. It also sets up a variety of security standards for customer medical information.
Any questions or concerns on HIPAA should be referred to one of your home office underwriters.
When a policy is issued other than as applied for, an amendment will be sent with the policy. The policy cannot be amended without a valid endorsement. The amendment that is sent amends only the applicant’s answers on the application. These amended answers form the basis of the as issued policy. It must be signed and returned to complete the case. An amendment is required when changes must be made to the original application. The signed copy must be returned to the Home Office within the 60 day delivery period.
When the "Cash with App" is short of the initial premium on a policy issued as applied for, the balance will be requested. Two months' premium is required for PAT cases.
If, before the policy is delivered, the health, occupation, or other condition of the risk is different from that represented in the application and/or other evidence of insurability submitted, then the agent must report the new information to the Home Office underwriters. This rule applies even when applications are written using the Temporary Insurance Agreement. (Guidelines for this are attached.)
Initial premiums are accepted on any mode of C.O.D. issues. The remittance should be clearly identified as to policy and purpose. Any special requirements such as a Pre-Authorized Transfer (PAT) Authorization, must also be met.
AStatement of Continued Good Health and Continued Insurability will be required:
For C.O.D. cases if the most recent health data is more than 90 days old.
If a Policy is issued other than as applied for (i.e., substandard rating, benefits excluded, amount of coverage decreased or modified, etc.) and the most recent health data is more than 90 days old.
Prior to policy delivery, the Company reserves the right to require a Health Certificate for any case.
The policy will not be put in force until the Company approves this statement of health.
Columbus Life will charge an additional fee not to exceed the actual costs incurred in the following cases:
In cases involving medical tests which were not requested nor required; or
If a medical is received but a fully completed application was never submitted to the Home Office.
Following are examples of in-house changes and requirements. Note these guidelines when replacing any permanent coverage. You are urged to evaluate the existing policy carefully. Most old Columbus Mutual cash value policies are excellent values at this point and should be kept in force.
If there is no increase in the death benefit, treat the exchange as a regular conversion.
If there is an increase in the death benefit over the conversion amount, you should use our regular underwriting rules and requirements applied just to the increased risk amount.
If the original policy or policies were issued at standard rates, and there is no reinsurance involved with the replaced policy or policies, the company will consider the new universal life policy on a non-medical basis.
If the original policy or policies were issued at standard rates, the company will consider the increase in death benefit amount subject to our regular nonmedical limits and requirements for the increase. (This again assumes no reinsurance.)
Example: If a $50,000 Life 101 plan is being exchanged for a $125,000 universal life, and the insured is now age 35, the underwriting requirements will be based on the $75,000 increase at age 35 (the original $50,000 amount would be considered on a non-medical basis).
You should use the same guidelines as listed above in the "Permanent Non-Term Policies to Universal Life" Section.
Since there is no policy provision allowing a conversion or exchange of this type, the company requires regular underwriting based on the full amount of the new term policy being applied for.
This type of internal exchange is strongly discouraged. Therefore, the company does require regular underwriting based on the full amount of the new term policy being applied for.
ART 100, YRT 70, YRT 100, 5 Year Renewable/Convertible Term or any of the old level term products: use "Term Policies to Universal Life" section.
Family Plan Rider or Other Insured 10 Year Term Rider: full evidence of insurability will be required irrespective of the amount of the Other Insured Adjustable Term or Other Insured ART Term rider being applied for.
If supplemental benefits and/or riders are included on the original policy, comparable coverage may be transferred to the new universal life provided there is no increase in risk amount, and the primary insured is the same.
Note that some (or all) of the supplemental benefits/riders may not be available in some states. Transfer of benefits would therefore not be available in these situations. Exchange of a policy with riders for a universal life without riders is discouraged.
The Company retains the right to require regular and/or special underwriting requirements, should it feel it is in the Company's best interest to do so.