To think this insurance money isn’t ‘ours’

[AutumnLeaves333]

My db dies last year with no will and no assets financial or otherwise. However the company he worked for recently contacted my parents and said that there would be an insurance pay out of some kind (no idea how much etc). Presumably when my brother signed the employment contract he has specified that my parents would be his next of kin, but would they also have asked him to state who any insurance would be paid to in the event if his death?

I ask this because db did have a child who he didn’t find out about until the child was older and he didn’t have a very close relationship with them (my db would have liked closer relationship but the child had a stable family with stepfather and my db was not In a position to offer stability due to his own issues with addiction) however since finding out about child he did pay maintenance and remain in contact with the child and mother without taking on actual ‘parenting responsibilities’ as it were.

The child is now over 18 and I believe they should be the sole beneficiary of any insurance payout, I don’t know what my db would have wanted though or is he would have specified in his employment contract. No one in my family has ever had any financial security of any kind and my parents think we should split any money between us all so everyone gets a share however small, my db would probably have to wanted to help out all his family including his child if he could but morally, and maybe legally, I believe the money is dbs child’s and not ours at all. Can anyone clarify who the insurance money actually belongs to?

Which country are you in?

Scotland

That's a very difficult one. Hopefully someone with some insurance knowledge will come on soon.

Technically it belongs to who he put down as beneficiary. However going off NOK his child should inherit if there's no will. Morally it belongs to his son. Your parents need to find out if they are named.

Did your brother learn about his child before he nominated his parents?

Not sure if it's any different in Scotland but with a death in service insurance pay out here you can nominate the beneficiary and it falls outside of the deceased's estate, so not going to the child at all.

Is it an insurance policy or death in service benefit from his pension?

If your DB nominated your parents to receive the payout then that's what he wanted. He could have changed it to his son if he wanted, but he didn't.

I'd suggest as a gesture of good will your parents perhaps give the son 25%?

I have one of these attached to my work pension.

We have the option to specify who the beneficiaries are. You can split it however you like. Mine is 100% to my daughter.

If we don't specify IIRC it's part of the person's estate and so goes to beneficiaries of the will.

If he specified it's the beneficiaries' money and they can do what they like with it.

@determinedtomakethiswork yes but I’m not sure who if anyone he ‘nominated’. Due to his addictions he actually had a fairly reduced mental capacity, he was also very young and definitely wouldn’t have been expecting to die. So even if he nominated my parents I don’t believe his wishes would necessarily have been for them to have all the money ( although they certainly wouldn’t keep it all themselves, they just want to make it ‘fair’)

When I've had these through work they've always required me to specify who the beneficiary would be, it was usually part of the paperwork when completing contract and pension details

@cloudglazer the company said ‘insurance’ but my parents weren’t really clear in it, they were surprised by the call and upset by it too to be honest, so I don’t think they really questioned much. They have had to fill out some paperwork is all they have told me at this point. We need to have a proper discussion but I would just like to know a bit more about where we stand before we make any decisions.

With respect @AutumnLeaves333, there is no “we”. Your parents will get the money and it’s entirely up to them what they do with it. If I were you I’d let them get on with it and let them make their own decision.

@BIossomtoes my family isn’t like that,my parents wouldn’t make a decision about it without discussing it and if we refused to discuss it they would probably be upset!

I agree with @Blossomtoes. If they've contacted your parents it's because they are the beneficiaries. That's where it ends. Please don't pressure them into making decisions about who you think they should give money to. You're entitled to your opinion but not to put it on them.

In pensions or life assurance etc you generally specify the beneficiary/ies. So if your parents are specified, then legally and morally the money is theirs.
It sounds like your parents are lovely to consider sharing the money around. You could give your share to your nephew if you felt that was something you'd like to do.

thank you everyone, I do believe that if my brother nominated my parents it was either because he didn’t give it any thought whatsoever and automatically put them as he would next of kin, or because he trusted the family to make the decision for him. I still believe the money really belongs to his child and not us but I see that others think it is okay for my parents to be the beneficiaries if that is what my brother specified so I will take that on board.

He would have had to assign someone when he signed the contract I would imagine. It sounds like your parents are the beneficiaries so they can do what they want with the money.

Did your dB child inherit from their father or is this the only money? Morally I would include them in a split but I don't know if I would give them 100%. It would depend a lot on circumstance.

I am less clear on insurance policies, but if it's a death in service benefit from his pension, it will go to the people your brother specified on his expression of will form. He would have chosen that, it's nothing to do with next of kin and can't be changed. I suspect it is, as it was his employer who rang your parents.
I am sorry for your loss.

@IAmAnIdiot123 by db had absolutely no estate so no one inherited anything, this is the only money.

And pension benefits are treated differently to other assets in an estate.

I agree with this, if you want to give your share to dn once you have it, you can.

My auntie wasn't included in my nans will so my mum split her share equally between the three of us (im am only child)

Your parents could gift some or all of the money to your DB's child if they wanted to

It may depend on the scheme's rules. In one of mine I could nominate but this wasn't set in stone and your dependents/relatives could apply for this to be changed if circumstances had changed, eg marriage, children, divorce.

Thank you @cloudglazer that’s really helpful. having looked into if a bit more I believe it is death in service benefit.