Beneficiaries in practice: how do I name them, how do I change them, and what about minor children?
Names or “legal heirs”? A revocable or irrevocable beneficiary? Who manages a minor’s money, what a trust is, what happens with an assignment to the bank, a beneficiary abroad, or if nobody is named. What we know, what we could not confirm for Cyprus, and what to ask in writing.
In short
You name one or more beneficiaries, primary and contingent, and change them with a written, signed request; they do not change by themselves on marriage, separation or a child. For minor children and trusts in Cyprus we could not confirm the rules: ask a lawyer.
- Ask each insurer in writing who your beneficiaries are today.
- Write names with full details, percentages that add up to 100%, and a contingent beneficiary.
- After a marriage, separation, birth or death, update the nomination with a signed request.
- Tell someone you trust where the policies are.
From the series “The questions you are afraid to ask”: how what you sign actually works, in plain words.
At a glance
- You can name one or more beneficiaries, primary and contingent; if the primary dies first, the contingent receives the benefit.
- A beneficiary does not change by itself on marriage, separation or a child. It changes with a written, signed request.
- For minor children, trusts and how a will relates to a beneficiary form in Cyprus, we could not confirm the rules: ask a lawyer.
- Cyprus has had no estate duty since 2000.
One line on a form, with great weight
“I wrote ‘legal heirs’, did I do well?” “The children are small, who will receive the money?” “We separated, is my ex still the beneficiary?” The beneficiary may be the most important line of a life policy, and it is often filled in in a hurry. The good news is that it can usually be put right easily, as long as you do it while you can.
Who is who
The policyholder is the person who owns the policy and usually decides and changes the beneficiary. The insured is the person whose life the cover is based on. The beneficiary receives the death benefit. A Cyprus law firm describes that you can name one or more beneficiaries, primary and contingent: if the primary dies first, the contingent receives the benefit. Money at maturity or on surrender usually goes to the policyholder, as the policy sets out.
Names or “legal heirs”?
A Greek insurance article (Greece, not Cyprus) advises writing names rather than “legal heirs”, to avoid disputes, and notes that under Greek law anyone who renounces the inheritance also loses an amount paid to “legal heirs”. For Cyprus we could not confirm whether an amount paid to a named beneficiary stays outside the deceased’s estate. What holds everywhere: names with full details, shares that add up to 100%, and a contingent beneficiary make life easier for the family.
Revocable or irrevocable?
The Community Legal Information Centre of the University of Hong Kong (not Cyprus) explains it simply: a revocable beneficiary can be changed by the policyholder without their consent; for an irrevocable one the beneficiary’s consent is needed first. In Cyprus we found no law on this distinction, so ask the insurer whether your nomination is revocable and how it is changed in writing.
Minor children and trusts
A minor child can be named as a beneficiary. The hard question is who will manage the money until adulthood, and how the insurer pays a minor. We could not confirm the rules in Cyprus, so ask a lawyer and your insurer. In the UK (not Cyprus) many policies are “written in trust”: they are paid to trustees who must act for the children. Whether and how this is done in Cyprus, and with what effect, we did not confirm; the UK tax reason does not apply here, since there has been no estate duty since 2000.
Assignment to the bank
When a policy is assigned to the bank for a loan, the bank is paid first, up to the loan balance, according to the terms of the assignment. If an amount is left over, where it goes depends on those terms and the beneficiary nomination; ask for written confirmation from both the insurer and the bank. For housing loans, the bank must accept an equivalent policy from another insurer (Law 41(I)/2017, Article 12(4)).
Your questions, one by one
What is the difference between a revocable and an irrevocable beneficiary?
A revocable beneficiary can be changed without their consent; for an irrevocable one their consent is needed first. That is how sources abroad explain it; in Cyprus we found no law on the distinction. Ask the insurer what applies to your own nomination.
Is it better to write names as beneficiaries or “legal heirs”?
Names, with full details and shares, usually leave less room for disputes and delays. “Legal heirs” may require proving who they are, which takes time. For the legal consequences in Cyprus, ask a lawyer.
Can a minor child be a beneficiary, and who manages the money until they’re an adult?
Yes, a child can be named. Who manages the money and how the insurer pays a minor, we could not confirm for Cyprus. Ask a lawyer and your insurer, and consider covering it in your will too.
What does “writing a policy in trust” mean, and is it relevant in Cyprus?
In the UK (not Cyprus) it means the amount is paid to trustees, who must use it for the beneficiaries, outside the deceased’s estate. Whether and how this is done in Cyprus, we did not confirm, and the tax reason does not apply here. Ask a lawyer whether it would help in your case, for example for minor children.
How do I change a beneficiary — is a phone call enough or do I need a signed form?
Usually you need a written, signed request or the insurer’s form, not a phone call. Ask for written confirmation that it has been recorded, and keep it with the policy. If the nomination is irrevocable, the beneficiary’s signature may also be needed.
If the bank is assignee for my loan, can I still name my family as beneficiaries for the rest?
Often yes: the bank is paid first, up to the loan balance, and whatever is left may go to your beneficiaries, depending on the terms of the assignment. Ask the insurer and the bank for written confirmation of how the remainder will be paid.
Can a beneficiary be a charity, a company or a friend who isn’t family?
Usually yes, on the insurer’s terms, and it may ask you to explain the relationship. Write full details, for a charity or company with its registration number. If you have family who depend on you, think about their needs too.
Does the beneficiary have to know they are named in the policy?
Usually it is not required. But if nobody knows the policy exists, the payment may never be claimed. Tell a trusted person where the papers are, or keep them in your family folder.
Who receives a maturity or surrender payment — the beneficiary or the policyholder?
Usually the policyholder, because the beneficiary receives the death benefit. The policy may set something else for maturity. Read what yours says.
Can I name a beneficiary who lives abroad, and how would they be paid?
Usually yes. Payment is normally by bank transfer, and the insurer may ask for certified documents or translations. Ask now what will be needed, and write the beneficiary’s full contact details.
What happens if no beneficiary is named at all?
Then whatever the policy sets applies; often the amount goes to the policyholder’s estate, and the family may need the estate procedure, which takes time. Read your own policy’s clause, and better still, name a beneficiary today.
If my will says one thing and the policy’s beneficiary form says another, which one counts?
We could not confirm how this is resolved under Cyprus law. Ask a lawyer. The safest course is for your will and your beneficiary nomination to say the same thing, and to update them together.
Can I split the amount between several beneficiaries in percentages?
Usually yes. Write shares that add up to 100%, and say what happens if someone dies before you: whether their share is divided among the others or goes to a contingent beneficiary. Ask the insurer how it words this.
What happens if the beneficiary dies before me?
If you have named a contingent beneficiary, they receive the benefit. If not, whatever the policy sets applies. Update the nomination as soon as you can after such a loss.
We separated. Is my ex-spouse still the beneficiary?
Most likely yes, until you change it: the nomination does not change by itself on separation. Before changing it, check whether the divorce or maintenance agreement says anything about the policy. Then make a written request and ask for confirmation.
Can I name my partner if we are not married?
Usually yes, by name and with full details. It matters especially, because an unmarried partner may not have the same rights to an inheritance or state benefits. Ask the insurer and, for inheritance, a lawyer.
Is the amount the beneficiary receives taxed?
Cyprus has had no estate duty since 2000. The Income Tax Law exempts a lump-sum compensation for death; for the tax treatment of a particular life-policy payment, confirm with a tax adviser. The executor or administrator submits a statement of the estate within 6 months.
Questions worth asking
- Who are the beneficiaries of my policy today, and with what shares? Can you send it to me in writing?
- Is the nomination revocable? How do I change it?
- How do you pay a minor beneficiary, and what documents will the family need?
- With the assignment to the bank, where does whatever is left over the loan go?
What you can do from today
- Ask each insurer in writing who your beneficiaries are today.
- Write names with full details, shares that add up to 100%, and a contingent beneficiary.
- After a marriage, separation, birth or death, update the nomination with a signed request.
- If you have minor children, speak to a lawyer about managing the money and your will.
- Tell a trusted person where the policies are, or put them in your family folder.
Every policy has its own terms. What we write here is general information, not advice; for your own case, what your policy says applies, and it is worth confirming it in writing with your insurer.
Much of what we describe about how things work is general practice, as public and consumer bodies in other countries explain it (not Cyprus). In Cyprus the terms of each policy are not approved in advance by the Superintendent of Insurance (Article 224 of Law 38(I)/2016), so what counts for you is your own policy and what the insurer confirms to you in writing.
Sources
- Mondaq (AGP Law), 13 December 2022 — Life insurance in Cyprus (beneficiaries)
- CLIC, Community Legal Information Centre (University of Hong Kong) — Revocable and irrevocable beneficiaries (Hong Kong, not Cyprus)
- insurancedaily.gr — the terms of a life policy and “legal heirs” (Greece, not Cyprus)
- MoneyExpert — Writing life insurance in trust (United Kingdom, not Cyprus)
- PwC Cyprus — Tax Facts & Figures 2024 (estate duty abolished; statement of assets)
- CyLaw — Income Tax Law 118(I)/2002, Article 8 (exempt income)
- CyLaw — Administration of Estates Law, Cap. 189
- CyLaw — Law 41(I)/2017, Article 12 (insurance linked to a housing loan)
- CyLaw — Law 38(I)/2016, Article 224 (policy terms are not pre-approved)
Read also: Beneficiaries: the mistakes that cost · Who gets the money? · A single parent or a blended family: what do I watch? · Separating: what happens to our policies? · After a death: where do I start? · Insurance for a bank loan · My family folder · A group scheme at work: what happens when I leave? · Underwriting step by step
If you would like a second look, book an appointment with an advisor and bring your policy and your questions. You will go through them together, with no obligation.
