Beneficiary: who receives the money

In Filipino the word is benepisyaryo. Who counts as your beneficiary depends on where the money comes from: in a private life policy you choose, and in SSS the law chooses for you.

How it works in the Philippines

In a life insurance policy

You name your beneficiaries on the application, with each person’s share. The Insurance Code gives you three rules to know:

• You can change them. You may change the beneficiary at any time, unless the policy says you have given up that right (Insurance Code Sec. 11). A beneficiary you cannot change is an irrevocable beneficiary.
• What is on file when you die is final. If you never change the beneficiary, Sec. 11 treats the names on the policy as irrevocable at your death.
• A beneficiary who wilfully brings about the death loses their share. This covers a beneficiary who is the principal, an accomplice or an accessory in wilfully causing the insured person’s death. That share goes to the other beneficiaries. If there are none, the policy decides, and if the policy is silent, the money goes to your estate (Sec. 12).

In SSS

In SSS the law decides first, and the names you list come last. RA 11199 Sec. 8(k) sets the order:

1. Primary beneficiaries: your dependent spouse, until he or she remarries, and your dependent children. A dependent child is unmarried, not gainfully employed and under 21, or older but permanently unable to support themselves because of a condition they were born with or that began while they were a minor (Sec. 8(e)).
2. Secondary beneficiaries: your dependent parents, only if there is no primary beneficiary.
3. Anyone else you named in your SSS record, only if there is no dependent spouse, child or parent.

If there is nobody in any of these groups, the SSS death benefit page says the benefit goes to your legal heirs under the law of succession.

In Pag-IBIG

RA 9679 Sec. 10 says the savings in a Pag-IBIG account are paid to the member, “his estate or beneficiaries”, when the membership ends. Sec. 19 makes Pag-IBIG benefit payments free of tax.

Worked example

This is a made-up policy, for illustration only. Ana is an OFW with a life policy of PHP 1,000,000. She names her mother and her son, 50% each.

Mother, 50%

PHP 500,000

Son, 50%

PHP 500,000

Total paid

PHP 1,000,000

Her son is 15, so he cannot sign for the money himself. If no court has appointed a guardian, Insurance Code Sec. 182 lets his father act for him, without a court order or a bond, when the minor’s interest is not more than PHP 500,000 (or another amount the Insurance Commissioner sets). The mother acts only if the father is absent or cannot. If neither parent can, Sec. 182 lets a grandparent, the eldest brother or sister aged at least 18, or a relative who has actual custody of him act as guardian without a court order. Ana has died, so here her son’s father can receive the PHP 500,000 for him. For a share above the limit, the parents’ shortcut in Sec. 182 does not apply.

Ana’s SSS death benefit works differently. Say she is married and her son is her only child. Her husband and her son are her primary beneficiaries, so SSS pays them whatever names she wrote on her SSS record. Her mother receives nothing from SSS while they qualify.

Where you meet it

• The beneficiary section of a life insurance application, where you write each name, relationship and share.
• Your SSS member record and the member data change form (E-4), where you list your spouse, children and parents.
• A group life enrolment form at work.
• Your Pag-IBIG membership record.

Common mistake

The most common mistake is never updating the beneficiary. A policy bought before a marriage, a birth or a death can still name someone who should no longer receive the money, and under Sec. 11 the names on file at your death are the ones the insurer pays.

The second is naming “my estate”. The money is then paid to your estate and shared out when the estate is settled, along with everything else you leave. The tax code also counts life insurance paid to your estate as part of the estate for estate tax (NIRC Sec. 85(E)). The same section counts money paid to a beneficiary you could have changed, unless the policy says the designation is irrevocable. Settling an estate without going to court is explained in the extrajudicial settlement guide, and the tax in the estate tax guide.

See the SSS death benefit guide for how SSS pays primary and secondary beneficiaries.