A woman who took out life insurance designated her son as the beneficiary. Shortly after the son died, the woman also passed away. In this case, the Supreme Court ruled that the insurance company must pay half of the insurance money to the father, the son’s first legal heir, and a quarter to the grandfather and grandmother, the second legal heirs.
The Supreme Court's first division, led by Chief Justice Shin Suk-hee, dismissed the appeal from Mr. A in the insurance payment lawsuit filed against the insurance company, deciding to uphold the second trial's judgment.
Mr. A was married to his ex-wife, Ms. B, and had a son before divorcing. After the divorce, Ms. B raised their son and later remarried. However, both Ms. B and the son were murdered by her new husband on the same day. At the time of her death, Ms. B had a life insurance policy that would pay 50 million won to her son.
Mr. A filed a lawsuit against the insurance company, claiming that they should pay him 50 million won in death benefits as he was the legal heir of his son.
The insurance company countered that Mr. A was not a beneficiary under the insurance contract but merely the legal heir of the son, therefore they could not pay the insurance money. They also argued that since the designated beneficiary, the son, died first, and Ms. B died without designating another beneficiary, the death benefit should be paid to Ms. B's legal heirs.
The first trial ruled in favor of Mr. A. The first trial court stated, “Unless B, the insurance contract holder, designated a new beneficiary before her death, Mr. A, as the heir of the beneficiary who was deceased, becomes the beneficiary,” and ordered the insurance company to pay Mr. A 50 million won. The insurance company appealed the first trial ruling. During this process, Ms. B's parents also joined the lawsuit.
The second trial found that both Mr. A and Ms. B's parents would become beneficiaries. The second trial court stated, “In cases where the designated beneficiary passes away and there is no change in the beneficiary at the time of the insurance incident, the legal heirs of the surviving beneficiary at the time of the incident will be confirmed as beneficiaries,” adding that it is reasonable to consider the legal heirs of the beneficiary to include the “heirs of the heirs” or “secondary heirs.”
According to the court, since the beneficiary, the son, died before Ms. B, and at that time, Ms. B did not designate another beneficiary, her legal heirs, the father Mr. A and the mother Ms. B, became the beneficiaries. Further, since Ms. B also passed away, Ms. B’s inheritance share would be received by her next of kin, her parents. The court ruled that they could receive the insurance money according to the ratio of their legal inheritance shares. As a result, the insurance company was ordered to pay Mr. A half of the death benefit, and each of Ms. B's parents a quarter.
Mr. A appealed the second trial ruling, but the Supreme Court found no issues with the original ruling.