Empty hope: Beneficiary status through subscription rights in life insurance

The subscription right regulates who is entitled to the agreed benefit in the event of an insured event. Insured persons can determine their individual subscription rights in order to avoid disputes later on. Why can someone else become a beneficiary in case of doubt despite the subscription right?


Can subscription rights be revoked?

The Frankental Regional Court (judgment of 12.10.2022, Az. 8 O 165/22) named its decision “Decision of the Month”: It concerned the race between the heirs and the beneficiary – the timely revocation of the subscription right by the heirs had thwarted the policyholder’s intended gift before his death.

In addition to the revocation for economic reversal, completely contrary to the testator’s will, there is also the possibility for creditors and estate insolvency administrators to declare a challenge. This money is then not gone – it just goes to a completely different recipient later. If, for example, the estate curator or executor fails to take action in this regard, he or she will immediately become liable for compensation to the heir; in addition, doubts will arise as to whether he or she is suitable for his or her office.


What if no one receives the money from the life insurance in the end?

If all the details remain secret, i.e. heirs and beneficiaries know nothing, and nobody contacts the insurer, the money simply stays where it is – with the insurer. The situation will be similar if assets are deposited with foreign banks, for example.

Foundations, sometimes not only abroad, also make little effort to fulfill any favors without being asked. As soon as the statute of limitations has expired, such onerous liabilities can be properly derecognized in the accounts as so-called “extraordinary income”.


The risk for banks and insurers

Even months or years later, heirs could still come up with the idea of reclaiming the assets paid out to the beneficiary. And possibly not only by the recipient of the money but also by the paying bank or insurance company. The legal basis for such considerations may not only be the absence of a gift agreement from the outset, but also the subsequent legal structure for a reversal, such as revocation and rescission in particular.


The normal legal case of a gift

If the policyholder makes an irrevocable gift of the insurance benefit to the revocable beneficiary in the event of death and the beneficiary accepts the gift, this is no longer a revocable subscription right, but ultimately corresponds to an irrevocable subscription right. But not for the insurer, as long as he does not know about it.

As the Federal Court of Justice stated, for example, in the ruling of the IX Civil Senate of October 22, 2015 (IX ZR 248/14) said that “according to established supreme court case law, the revocable subscription right is initially no more than an unsecured hope for the acquisition of a future claim, and therefore legally a nullity […] The revocable subscription right takes legal effect at the […] time of the occurrence of the insured event (cf. § Section 159 para. 2 VVG). In the case of an irrevocable designation, the beneficiary acquires the claim to the insurance benefit immediately (cf. § 159 para. 3 VVG […]).”

The practical problem is that in this “normal legal case” the insurer would first have to inform the beneficiary that he has been given a gift in the event of death – perhaps this fails because the insurer has not learned of the policyholder’s death or the beneficiary has “moved away unknown”. In addition, the beneficiary would have to react, i.e. first accept the gift as a bilateral contract or receive the benefit from the insurer: Until then, sufficient time can pass – for example for rescission and revocation.


The interest in secrecy

Only if the insurance also includes a bet on the life of the beneficiary (as the insured person) must the beneficiary agree – i.e. be informed. However, there is often an interest in keeping the details to oneself as the policyholder or testator, which can be changed at any time. Perhaps the heirs should not even know which assets have been transferred – for example, because this is intended to circumvent compulsory portion rights.

In addition, the beneficiary may not want to be at the mercy of any judge’s law, which could then lead to the path to the supreme court with its established case law being blocked – according to the motto “above me there is only the white-blue sky”.


Protection against loss of assets and taxes ?

Professional designers know the person of the “protector”. For example, the testator can appoint a foundation or another trusted person to monitor and enforce the execution of the contract from the outset. If the assets are under its control and abroad, the tax regime can be optimized. Suitable arrangements, which are not available off the shelf from banks and insurance companies, use the “post-mortem allowance” to transfer even larger assets in a tax-neutral manner.

The control question to the policyholder would be: “And who will take care of your safe deposit box in which you keep the policy after your death?”. No insurance intermediary would think of binding his customer – i.e. the policyholder – for the future by means of notarized agreements.


by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm


by courtesy of

www.experten.de (published on 10.01.2023)

Link: www.experten.de/2023/01/leere-hoffnung-beguenstigung-durch-bezugsrecht-in-der-lebensversicherung/


www.handwerke.de (published in Computers in Trade, issue 01/02.2023, pages 6 and 7 under the heading: Why someone completely different can become a beneficiary)


www.network-karriere.com (Published in Network-Karriere issue 02/2024, page 24 under the headline: Life insurance: Who is entitled to the benefit in the event of an insured event?)




Our office in Munich

You will find our office at Fasolt-Strasse 7 in Munich, very close to Schloss Nymphenburg. Our team consists of highly motivated attorneys who are available for all the needs of our clients. In special cases, our law firm cooperates with selected experts to represent your interests in the best possible way.

About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
»More about Dr. Johannes Fiala

On these pages, Dr. Fiala provides information on current legal and economic topics as well as on current political changes that are of social and/or corporate relevance.

Arrange your personal appointment with us.

Make an appointment / call back service

You are already receiving legal advice and would like a second opinion? In this case please contact Dr. Fiala directly via the following link.

Obtain a second legal opinion

(The first phone call is a free get-to-know-you conversation; without consulting. You will learn what we can do for you & what we need from you in terms of information, documents for a qualified consultation.)