- Under the Insurance Act you can name a beneficiary in the contract or by a separate declaration, and you can alter or revoke it by declaration unless it is irrevocable.
- If a named beneficiary dies first and the contract or declaration says nothing about their share, it goes to the surviving beneficiaries equally.
- Naming minors without a trustee can send the money into court, so a trustee is worth considering.
Many policyholders want to divide life insurance among several people, such as sixty percent to one child and forty percent to another. The idea is simple, but the wording on the form decides what actually happens.
This article explains how designations work in Ontario, how shares are treated when someone dies first, and the common mistakes that cause delay or disputes. It does not replace advice on your own policy.
How a designation is made
Under the Insurance Act, the person insured can name themselves, their personal representative (estate) or a beneficiary to receive the insurance money, in the contract or by a separate declaration. Subject to section 191, you may alter or revoke a designation at any time by a declaration. Subject to the Authority rules, an insurer may restrict or exclude in the contract your right to name beneficiaries.
A declaration can be provided electronically, but it must meet the requirements in the Authority rules. Check with your insurer which method it accepts.
Wording a percentage split
Use the insurer's own form where possible, and be precise. The wording should let a claims officer work out each person's share without guessing.
- Give each beneficiary's full legal name and their relationship to you.
- State each share clearly, and make sure the shares add up to the whole amount.
- Say what happens if a beneficiary dies before you, rather than leaving it to the default rule.
- Avoid vague terms. Naming your "heirs", "next of kin" or "estate" counts as naming your personal representative, so the money is paid to the estate.
When a beneficiary dies first
If the contract or a declaration does not say who takes a predeceased beneficiary's share, the share goes to the surviving beneficiary, or is shared equally if several survive. If none survive, it goes to the insured or the insured's personal representative, which means the estate.
This default may not match your percentages. A contingent beneficiary named in the policy is a disposition of the share that the policy itself provides. If you want a predeceased person's share to go to their children rather than the other beneficiaries, say so in the designation.
Things that commonly go wrong
| Problem | What the rules say |
|---|---|
| Designation only in a will | A designation in a will has no effect against a later designation, and it is revoked if the will is revoked. |
| Attempted irrevocable designation in a will | It is treated as an ordinary designation and stays revocable. |
| Beneficiary is a minor | If no one can give a valid discharge for the minor's money, the insurer pays it into court, or to a guardian of property instead. |
| No living beneficiary | Money payable to the estate becomes part of the estate and is dealt with under the will or intestacy rules, with estate debts. |
An irrevocable designation can be made only in the contract or in a declaration that is not part of a will, filed with the insurer while the life insured is alive. While that beneficiary is living, you cannot change or revoke it without their consent.
What to do next
Where a beneficiary is designated, the insurance money is generally not part of the insured's estate and not subject to the insured's creditors. However, a court setting dependant support adds life insurance you owned back to the net estate, so a designated beneficiary can be reached by a support order.
- Request a copy of the current designation from your insurer.
- Decide whether any beneficiary should be irrevocable, and understand the consent that follows.
- Consider appointing a trustee for any beneficiary who is a minor.
- Name backup beneficiaries or state who takes a share if someone dies first.
- Review the designation after major life events, and ask a lawyer if the wording is complicated.
Frequently asked questions
Can I name beneficiaries by percentage on any policy?
You can name beneficiaries in the contract or by declaration. An insurer may restrict or exclude your right to name beneficiaries in the contract. Ask your insurer how it records shares.
What happens if one of my beneficiaries dies before me?
If the contract or a declaration does not say, their share goes to the surviving beneficiary, or equally among several survivors. If none survive, it goes to the estate. You can avoid that default by stating who takes the share.
What if I name a child who is under 18?
If no one can give a valid discharge, the insurer must pay the money into court for the minor, though it may instead pay a guardian of property appointed under section 47 of the Children's Law Reform Act. You may appoint a trustee for a beneficiary, in the contract or by declaration.
Can I change the percentages later?
Generally yes, by declaration, subject to section 191. If a beneficiary was named irrevocably, you cannot change it without that person's consent while they are living.
Sources
- Insurance Act, R.S.O. 1990, c. I.8, s. 190(1) (e-Laws) — Ontario e-Laws
- Ontario.ca – Administering estates — ontario.ca
- Succession Law Reform Act, s. 72(1) — Ontario e-Laws
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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