Life Insurance: Why the Phrase “Alive or Represented” Doesn’t Mean What You Think It Does
A recent decision by the Insurance Ombudsman serves as a reminder that a seemingly innocuous phrase—"alive or represented"—can have consequences very different from what many policyholders imagine. This reminder is worth noting, as the beneficiary clause is the cornerstone of any life insurance policy.
The beneficiary clause determines who will receive the death benefit from your life insurance policy upon your death. It is this clause that gives the policy its financial and tax benefits. When a policyholder names a loved one as a beneficiary, they often anticipate the possibility that this beneficiary might die before they do. The phrase “living or represented” is then added next to the name. The intention is legitimate: to ensure that the descendants of the predeceased beneficiary can receive the death benefit in their place. But this mechanism, known as “substitution,” is governed by specific legal rules with which the general public is largely unfamiliar.
The trap uncovered by the Insurance Ombudsman
The case brought before the Insurance Ombudsman starkly illustrates the misunderstanding. A policyholder had named a relative specifically, with the notation “living or represented,” and, failing that, his own heirs. After his death, the insurer discovered that the designated beneficiary had also died several years earlier. The deceased’s sister then came forward and claimed the death benefit, arguing that, as her brother’s heir, she should act on his behalf and receive the funds. The insurer refused and paid the death benefit to the secondary beneficiaries specified in the contract. The sister contested this decision.
The Ombudsman ruled in favor of the insurer. The reason is found in Article 752-2 of the Civil Code. Substitution, a concept borrowed from inheritance law, applies in so-called collateral families—those who share a common ancestor but are not descended from one another, such as brothers and sisters—only in favor of the children and descendants of the deceased. Not to their brothers and sisters. In practical terms, a son or daughter of the predeceased beneficiary could have received the lump sum in their place. A sister, on the other hand, is not a descendant: she is a collateral relative, and the principle of representation does not benefit her.
Why Your Beneficiary Clause Deserves Regular Review
This decision raises a simple yet essential question for any life insurance policyholder: Does your beneficiary clause truly reflect your wishes? Many policyholders believe that the phrase “living or represented” guarantees that the death benefit will go to the beneficiary’s family, whoever they may be. This is a common misconception. In the context of collateral relatives, it applies only to direct descendants.
The Ombudsman emphasizes a key point: insurers and intermediaries have a duty to provide guidance. It is their responsibility to clearly explain the rules of the game so that the policy language accurately reflects the client’s wishes. For a saver, the practical takeaway boils down to a few principles. The beneficiary clause should be reviewed regularly with your advisor, particularly following any significant family event—such as a birth, death, marriage, civil partnership, divorce, or remarriage. It can be tailored to accommodate any desired scenario: transfer by family line, division of assets between a spouse and children, inclusion of grandchildren, or designation of a named alternate beneficiary.
There are several technical solutions available for specifying one’s wishes. The clause may explicitly designate, in the event of the principal beneficiary’s predecease, a specific person by name—including a brother or sister, provided that person is named. It may also provide for a division of the asset between a usufructuary (the spouse, for example) and bare owners (the children), which combines protection for the surviving spouse with subsequent transfer to the children while optimizing tax costs. For larger estates or complex family situations—such as blended families, children from a previous marriage, or cohabiting partners—filing the clause with a notary provides additional security and helps prevent it from being lost or contested.
A precise, well-thought-out, and up-to-date will helps prevent family conflicts and disappointments at a time when your loved ones least need them. It also determines the tax efficiency of the policy: a tax-free allowance of 152,500 euros per beneficiary for payments made before age 70, with taxation at 20% and then 31.25% thereafter—all benefits that require careful beneficiary designation. The standard clause pre-drafted by the insurer is suitable for typical situations, but it cannot replace a personalized assessment for more specific circumstances.
Source: Insurance Ombudsman, recommendation published in 2026; Article 752-2 of the Civil Code.
