Facility of Payment Clause
A provision permitting the insurer to pay part or all proceeds to a person with apparent legal responsibility for the insured's funeral or support when no named beneficiary exists.
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Practice This Concept
A group life insurance policy contains a 'facility of payment' clause. This clause allows the insurer to:
Pay a small death benefit to a relative or another person who incurred the funeral expenses, without formal proof of beneficiary status — The facility of payment clause permits the insurer to pay relatively small death benefits to a person who has a reasonable claim, such as a relative or someone who paid the funeral expenses, without requiring a formal proof of claim or waiting for the named beneficiary to come forward. It is designed for administrative convenience and expediency in settling modest claims. Because the amounts involved are modest, the clause balances prompt settlement of legitimate funeral and family expenses against the insurer's need for certainty of payment, and a good-faith payment under the clause discharges the insurer's liability.
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