Personal insurance: What happens in the event of termination by a caregiver?

When is the cancellation of a life insurance policy by a guardian invalid? And what about other personal or property insurance?

The OLG Nuremberg (partial judgment of 24.03.2016, ref. 8 U 1092/15) ruled, using the example of a life insurance policy, that termination by the guardian is invalid for lack of approval by a counter-guardian or the guardianship court. The widow, who had been appointed (revocably) as beneficiary in the event of death, successfully sued the insurance company – the insurer had already paid out a minimal surrender value due to ineffective termination by the guardian.


Approval requirement for disposals of €3000 and more

In the present case it concerned a risk life insurance for the repayment of a construction financing with 30,000 € death sum. The surrender value was €790. The guardian was guided by the surrender value and did not consider approval necessary, § 1813 I No.2. BGB. The OLG focused on the insurance benefit in the event of death and not on the surrender value, so that the €3,000 limit of § 1813 BGB was exceeded, and thus the termination was invalid.

In this context, the OLG defines: “A disposition is understood to be a legal transaction by which the disposer directly affects a right, i.e. either transfers it to a third party or encumbers it with a right or revokes the right or otherwise changes its content (BGH, judgment of 5 November 2009 – III ZR 6/09).

When a term life insurance policy is terminated, the content of a right directed towards performance is changed by its formative effect. Term life insurance grants an entitlement to benefits to the sum insured subject to the condition precedent and condition subsequent of the occurrence of the insured person’s death within the insured period. This claim is changed by the termination into the claim to payment of the surrender value in accordance with § 9 Para. 3 ABRi 2004. Thus, the termination is a disposition of a claim within the meaning of § 1812 para. 1 P. 1 BGB.”


Finally, the value at the time the guardian accepts payment of the surrender value is not the only thing that matters – it could be zero. For if the change in the content of the contract (surrender value instead of death benefit) also changes the content of the claim, then “the value of the claim before its change must be taken into account”, i.e. the sum insured.

The fact that this claim was realized only accidentally, here when the death occurred still within the insured period, was irrelevant. Therefore, cancellations of all insurance policies from which benefits of more than EUR 3,000 could be expected in the event of uncertain events are also affected.


Only with the approval of the opposing guardian

The (invalid) termination also results in the lapse or revocation of the subscription right. However, revocation is also subject to the approval requirement – even if the guardian had merely revoked the subscription right in isolation. As a rule, even separation or divorce do not cause the subscription right to lapse – the person under guardianship and later testator had not agreed anything of the kind. In the absence of a legal basis as an agreement between the beneficiary and the deceased, the heirs may claim the insurance benefit, for example by assigning the insurance claims or reimbursing the payment.

Caregivers may also think they need to cancel other personal insurance policies, such as disability insurance, life insurance, accident insurance, per diem long-term care and other supplemental health insurance, or property insurance, for current cash flow reasons. Then it will also depend on what the insurer has promised to provide. If this promise – for example as an insurance sum or pension promise – is over € 3,000, the termination by the guardian requires approval.

Insurers who, for example, accept the termination of supplementary health insurance, accident insurance, liability insurance or property insurance by the caregiver without the necessary authorization must nevertheless pay in the event of a claim due to the ineffectiveness of the termination. However, they can only demand payment of the contributions if they are not yet time-barred.


Insurance benefits are promised subject to conditions precedent and conditions subsequent. In the case of frequently ineffective terminations, one can first wait until the insured event has occurred and then sue “by way of a step-by-step action for information, settlement and payment with regard to the surplus participation” (OLG loc. cit.). Since certain employees of insurance companies occasionally miscalculate, as a plaintiff one will take the precaution of ensuring an accompanying actuarial appraisal of benefit claims including surplus participations for one’s own protection against miscalculations.


Provocation by cessation of payments by the guardian?

A so-called secret tip has been circulating among guardians, conservators, and executors and administrators for decades. Accordingly, the district court in charge of supervision is not even bothered with applications for approval – after suspension of payments, the insurer terminates the contract anyway. If the then uninsured benefit case occurs later, however, the respective legal representative is liable for the damage incurred, § 1833 BGB.

In general, there is a tendency among numerous courts that contracts concerning investments and insurance policies are to be left in doubt as the person concerned had once concluded them himself. For this reason, too, it is advisable for the guardian to have the contracts found examined in writing and, if necessary, also prognostically, not by bankers or insurance agents – but by independent fee consultants or experts, before any changes are sought. Courts of guardianship also often commission an expert opinion before granting approval.


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


by courtesy of (Published 07/09/2016)




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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.
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