The strange case of life insurance policies: if the beneficiary’s privacy clashes with heirs’ rights

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Maurizio Vasciminni
Pavia e Ansaldo Studio Legale, Rome
maurizio.vasciminni@pavia-ansaldo.it

Giada Russo
Pavia e Ansaldo Studio Legale, Rome
giada.russo@pavia-ansaldo.it

Giovanni Gigliotti
Pavia e Ansaldo Studio Legale, Rome
giovanni.gigliotti@pavia-ansaldo.it

Life insurance policies under Italian law

Generally, through a life insurance contract, the policyholder, against payment of a premium to the insurance company, guarantees the beneficiary a lump sum or an annuity on the occurrence of an event linked to their life, usually their death. Depending on the contract, other events, such as terminal illness or critical illness, can also trigger the payment.

Article 1920 of the Italian Civil Code allows life insurance policies in favour of a third person. The designation of such beneficiary can be made in the contract or by a subsequent written declaration to the insurer, or by will.

Life insurance policies and succession rule

As a result of the designation, the beneficiary acquires title in the benefits deriving from the insurance.

The sums owed by the insurance company to the beneficiary in the event of death of the insured person are not included in, and do not form part of, the inheritance. The right to the payment of the sum granted to the beneficiary is a right of the beneficiary, deriving exclusively from the insurance contract, and does not imply any participation in the inheritance.

On the death of the insured person, the heir can claim no entitlement to the insured sum, unless they were designated as the beneficiary. In this circumstance, they will, however, acquire a right which is completely independent from the right they have on the deceased’s assets as heir.

This is why, in some cases, life insurance policies can be used as an instrument of succession planning, in particular for those who wish to allocate capitals to certain persons after their death without running the risk of infringing the forced shares.

Despite the general rule of non-inclusion of life insurance policies in the inheritance, the Corte di Cassazione (the Italian Supreme Court) has set certain conditions under which the heir may legitimately challenge them.

As the Corte di Cassazione observed, a life insurance policy for the benefit of third parties is a contract that can serve a variety of practical purposes, such as a guarantee, a retirement provision or a liberality. In particular, when the beneficiary is a person who has no right to receive financial support from the policyholder, it must be assumed that the insurance policy’s purpose is a liberality.^[1]

Therefore, as the Corte di Cassazione stated, in life insurance policies the designation as beneficiary of a person not linked to the policyholder by any obligation of maintenance or economic dependence shall be considered as a liberality and constitute an indirect donation,^[2] unless proven otherwise. Consequently, the premiums for life insurance policies paid by the insured are donations to future beneficiaries and must, therefore, be included in the inheritance.^[3]

The balance between beneficiary’s privacy and the rights of the heir

In order to claim the restoration of their forced share on the inheritance, the heir needs to know the name of the beneficiary of the life insurance policy. However, the need of the heir may conflict with the beneficiary’s data protection right.

According to the case law of the Corte di Cassazione and the Garante della Privacy (the Data Protection Authority), the heirs have a general right to access data related to the personal sphere of the deceased person. However, such right does not go far enough to allow them to access data by which they can identify third parties, such as the beneficiaries of a life insurance policy.^[4]

In other words, while on one hand the Corte di Cassazione recognised the heir’s right to challenge the insurance policy affecting their forced share, on the other hand the same Court recognised the prevalence of the beneficiary’s right to privacy over the heir’s right to access the deceased’s insurance policy data (and then the system collapses).

In this context, the judement of the Court of Treviso of 27 February 2020 could represent a cool reaction to such traditional case law.

In this case, the Court of Treviso addressed the issue of the balance between the right to the privacy of the beneficiary and the right of access of the heir according to European Union Regulation No 2016/679 (the General Data Protection Regulation or GDPR).

The Court stated that the heir’s right to access the life insurance policy’s data in order to claim restoration of his forced share should obtain protection under Article 6(1)(f) of the GDPR. According to this rule, data processing is lawful if necessary for the purposes of the legitimate interests pursued by the controller or by a third party.

It should be also noted that, according to Article 9(2)(f) of the GDPR, processing of special categories of personal data is lawful if necessary for the establishment, exercise or defence of legal claims.

Therefore, in compliance with the aforementioned provision of the GDPR, the Court recognised the supremacy of the right of defence over the right to privacy, granting the heir with the right to access the identity of the beneficiary of a life insurance policy.

Conclusions: cross-borders aspects

The Court of Treviso’s judgment may also have an impact life insurance policies under the aspect of the law applied to it.

According to Article 22 of EU Regulation No 650/2012, a person may choose, as the law to govern their succession, the law of the state whose nationality they possess at the time of making the choice or at the time of their death.

Such law shall govern, inter alia:

1. the determination of the beneficiaries, of their respective shares and the determination of other succession rights;
2. the disposable part of the estate, the reserved shares and other restrictions on the disposal of property upon death, as well as claims which persons close to the deceased may have against the estate or the heirs; and
3. any obligation to restore or account for gifts, advancements or legacies when determining the shares of the different beneficiaries.

Therefore, choosing Italian law as the law governing the succession implies the application of the Italian law to the whole succession, included the regulation of restoration of forced shares in case of their infringement. Accordingly, a life insurance policy involved in a succession governed by Italian law might be challenged if infringing the heir’s forced share whose protection, according to the Court of Treviso, justifies the access to the beneficiary’s data (and the collapsed system – but unfortunately only it – comes back to life again!).

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