Article 174 of the Insurance Contract Law provides that:
“In the event that legal heirs are named as beneficiaries without indicating their names, insurance pay-outs are due to the policyholder’s successor in the absence of proof to the contrary or a contravening clause.”
This provision aims to settle the controversy arising from official doctrine and case-law with regard to insurance beneficiaries when the contract requires that the insurance pay-out should be paid “to the legal heirs”.
By including this new article in the law on terrestrial insurance contracts (LCAT), the legislator had hoped to benefit the policyholder’s successor with this insurance, so that any universal heir or legatee could now receive the insured capital given that the deceased’s inherited assets would then be shared between the legal heirs or legatees.
This provision, entered through the law of 13 January 2012 [19], immediately applied to contracts taken out after its entry into force [20].
With regard to life insurance contracts in force, article 3 of the above law set out a transitory period of two years during which the policyholder could sign an addendum to declare that they waive the application of the new article 110/1.
At the end of this transitory period, article 110/1 of the LCAT should be applied to the contract unless the addendum had been signed.
Unfortunately, for certain legatees, the transition period has not been without difficulties.
In one case submitted to the constitutional court and that led to the decree of 3 March 2016 [21], a man had taken out an insurance policy and appointed “his legal heirs” as the beneficiary.
Yet he had no legal heirs. However, he had written a will establishing a third party as the universal legatee of his succession.
This man died during the transitional period—before the end of the two year period during which he could have waived application of the new law. The insurer argued that the new provision could not be applied and with no legal heirs there was no beneficiary to the insurance contract.
The constitutional court considered that “The provision in question implies that while the policyholder of an insurance contract died before 5 March 2012 during the cited two year period, the provision contained in article 110/1 of the law of 25 June 1992 cannot be applied” [22]. Following a lengthy analysis of the preparatory work for the law, the court ruled that in principle the transitional provisions did not lead to discrimination.
However, the court qualified its ruling by highlighting there is an undermining of the right to respect of assets protected by article 1 of the first Additional Protocol to the European Convention on Human Rights given that, as in this case, the legatee is deprived of the benefit of the life insurance and there is no other possible beneficiary.
For the court, article 110/1 is therefore immediately applicable to the insurance contract in which the holder does not leave any legal heirs, except to establish, which the judge must then examine, that the holder had voluntarily decided to exclude the new article 110/1 during the transitional period and refuse the legatee the right to receive the insured capital.
For the court, there could be no discrimination given that the old Civil Code article 1471 established a priority right for the wife.
Therefore, this provision did not economically benefit one spouse over the other.
Furthermore, since the reform of 1976, the spouses are free to modify their matrimonial property regime to include transitional provisions that the legislator had not applied to them.
Unless they had modified their matrimonial property regime, spouses married under a conventional matrimonial property regime prior to the law of 14 July 1976 must apply all provisions of their regime, including the liquidation rules that have not been derogated by the “new” law.
