Can Someone Who Never Negotiated with an Insurer Still Legally Own a Policy?

Let’s say, for example, you take out life insurance on your brother and, every month, you pay the premiums. Are you the legal owner or is your brother?

A case like this was put before the Ombudsman, let’s see how it panned out.

The Case Involving the Legal Owner

The case put forward here was that the brother of the deceased took out life insurance on him. He paid the premiums and so assumed that he had a right to the proceeds when his brother died.

What the Documentation Said

In the document, however, the deal that the negotiation that the claimant claims to have made went differently. The wording of the policy documents was pretty clear. Members and those family Legal Owner of a Funeral Policymembers that qualify for benefits will be covered for death.

What that basically meant was that the cover was only for people who were both members of the scheme and who were the legal owners of the policy. In addition, there were no provisions to nominate a beneficiary.

The contract used the very nebulous phrase “Person entitled thereto.”

What Happened

When the bother died, he was classified as the legal owner of the policy. The complaint’s claim that the funds be paid to him was rejected. The company paid the money out to the deceased’s widow.

The complainant had paid for most of the funeral expenses and this was agreed by all parties.


The insurer agreed that the only contact that they had made was with the person paying the policy. They also agreed that they considered the deceased to be the policyholder and owner.

It was also established that no one had requested a mandate or authorisation for the brother to act in this capacity.

What’s the Basic Question Then?

Considering the circumstances, that the brother did this all on his own. And that there was no actual negotiation between the insurance company and the member covered. The question becomes, was the brother entitled to acquire rights in this manner and was the insurer legally allowed to deny those rights?

How It Played Out

The Ombudsman ruled that as the insurer had let the complainant reasonably believe that he would derive the benefit of the policy if his brother died, they should pay the funds to him. In addition to a reasonable rate of interest.


All info was correct at time of publishing