What to do when a National Western Life account holder dies

Three situations. National Western's life claim instructions say special claim forms apply if the death occurred outside the United States, was the result of a homicide, or occurred within two years from the date the policy was issued (or two years from reinstatement) — the contestable period. In any of those cases you should call the claims office at 1-800-531-5442 option 5 for the correct forms rather than submitting the standard Life Claim Package. Expect a longer review as well: every National Western claim is subject to verification of death, policy validity, and beneficiary status, and the company may request information from you or from third parties.

Because the annuity claim asks you to make an irreversible tax decision on the spot. The Annuity Claimant Statement (PB-1001) requires exactly one settlement option — A. Spousal Continuation, B. Lump Sum Payment, C. Installment Payments (Income for Fixed Period, Income for Life, or Life Income with Guaranteed Period), or D. Lump Sum Transfer to a new policy — and states in capitals that ONCE AN OPTION HAS BEEN ELECTED, IT CANNOT BE CHANGED, with elections treated as a full and final settlement once proceeds are processed. It also carries the withholding election: 10% federal withholding applies to the taxable gain on a non-periodic distribution unless you attach a completed W-4R, and Connecticut and Michigan claimants who do not file a CT-W4P or MI-W4P are withheld at mandatory 6.99% and 4.05% rates. Two mechanical requirements catch people out: the annuity contract must be enclosed with the claim unless you are continuing it as owner, and if you elect Income for Life you must enclose proof of age. The life claim (PB-1002) has none of this — it is a documentary claim on a death benefit that is generally income-tax-free.

Name the TRUST, not the trustee — General Provision F of the Change of Beneficiary form (SP-7161) says so explicitly, and adds that payment to the trust fully discharges the company. Show the trust the way Special Instruction H requires, for example "ABC Trust, under Trust Agreement dated January 2000," and supply either the pertinent pages of the trust document (name, date, and trustee signatures) or the Trust Information Form (DM-1094) in lieu of them. DM-1094 asks whether co-trustees may act independently or must act together and whether the trustees hold power without limitation over insurance transactions, and National Western says it will continuously rely on those answers — it also makes it the trustee's job to notify the company immediately of any change to the trust or its beneficiaries. Two mechanical traps: the form cannot be accepted with corrections or erasures, and you should not send the policy with it.

National Western imposes a 90-day probate deadline. Under General Provision E of SP-7161, where the beneficiary is the trustee named in the insured's last will, National Western must receive proof at its office within 90 days after the date of death that the will has been admitted to probate and names a trustee qualified and willing to accept payment. If that proof does not arrive in time, the proceeds are paid to the executors or administrators of the insured instead — that is, into the probate estate, exposed to creditors and to the delay the testamentary trust was meant to avoid. The designation wording on the form is "The Trust named in the last Will and Testament of the Insured." A living trust designation carries no such deadline, which is one practical reason to fund a trust during life rather than rely on a testamentary one.