Once someone dies, state laws and policy terms dictate who will receive their life insurance proceeds. Sometimes this may include someone other than their intended beneficiary claiming these funds as well.
disputes often stem from unexpected changes made while an insured is hospitalized or living in a nursing home. Learn when it’s appropriate and how you can contest a life insurance beneficiary.
1. File a Claim
Contesting a life insurance beneficiary designation can be an intricate and time-consuming process. If you believe that the deceased person’s choice should not be honored, filing a claim to challenge it might be in order. Before doing this, however, you must have standing to do so, meaning you have some relationship to them or are eligible to receive their death benefit under state law or contract with their insurance company.
If you want to challenge the designated beneficiary of an insurance policy, first fill out and submit an appeal form with supporting documentation showing your relationship to the deceased and desire for their death benefit to be received (lump sum or specific income). If this appeal form is denied by an insurance company, a letter detailing your case and evidence should also be included with your appeal submission.
As soon as an insurance company receives your appeal form, they will begin investigating your claim. This could take some time as they need to verify if you are actually an eligible beneficiary and not some suspicious individual; they also review original applications to make sure any changes made were legitimately approved by them.
Beneficiary disputes frequently arise when policyholders change beneficiaries just before death or while mentally or physically incapacitated. Such changes can be challenged if previous beneficiaries suspect coercion or lack of mental capacity and are able to demonstrate it to the court. It’s essential to review beneficiary designations after major life events such as marriage, divorce, births and deaths to make sure yours are up-to-date and protected against potential disputes with previous beneficiaries.
2. File a Suit
There may be several valid reasons to contest the beneficiary of a life insurance policy, depending on its terms and state law. As it can be an intricate legal battle, seeking legal help with contesting beneficiary designation is advised for best results.
Sometimes this issue arises because an insured changed beneficiaries before passing away and did not receive all or part of their death benefit, while in other instances allegations of undue influence or fraud might exist. Therefore it is crucial that individuals review and update their life insurance policies regularly, in addition to complying with their life insurers rules on changing beneficiaries quickly and promptly.
Beneficiary disputes frequently occur because an insured fails to remove previous beneficiaries from their policy, particularly spouses who were listed prior to divorce or separation. While some states have laws which automatically remove former spouses upon divorce or separation, it’s crucial that after going through the process it’s reviewed thoroughly so your policy updates appropriately.
Sometimes this occurs because the deceased did not clearly state any changes they desired to make to their life insurance policy, creating difficulties for beneficiaries who expect to receive the full amount of their death benefit.
If there is an allegation of fraud or undue influence during a beneficiary change, an insurance company will delay dispersing death benefits until court orders have been made in response. This legal procedure, known as interpleader, allows both sides of a dispute to present their cases before an impartial judge and provide resolution.
3. File a Motion
When purchasing life insurance, beneficiaries can be designated. If one or more recipients seem ineligible for receiving benefits upon your death, contesting their designation could become necessary; to prevent disputes altogether it would be beneficial to work closely with an experienced estate planning attorney to create a comprehensive estate plan that includes your preferred beneficiaries.
Typically, only the policyholder can make changes to a life insurance policy’s beneficiary list, although new beneficiaries could be added without their knowledge or consent, such as in cases where no longer owning it. Therefore it is essential that regular reviews take place after significant events like marriages, divorces and children being born into your life such as updating it after marriages, divorces and new children arriving.
Sometimes a beneficiary change may be challenged due to suspicions of coercion or undue influence by the previous beneficiary, typically by providing evidence such as fraud, pressure or duress; mental incapacity etc. Such claims are usually filed in probate court overseeing the policyholder’s estate and are known as interpleader lawsuits.
Life insurance beneficiary disputes often involve federal law as well. For instance, if your policy falls under ERISA (Employee Retirement Income Security Act), federal rules and regulations may dictate how any disputes are settled – this differs from state laws; cases under federal jurisdiction may even require separate court jurisdiction. An attorney can advise whether filing a federal lawsuit should be considered. Typically speaking, federal cases tend to be more complex and involve greater resources in their resolution.
4. Request a Hearing
Life insurance beneficiary designations can only be altered through formal procedures with an insurance company and cannot be changed via other methods like wills. Therefore, if someone believes a deceased loved one’s beneficiary change was invalid they can file a legal challenge with the probate court handling their estate. Unfortunately contesting life insurance beneficiaries can be complicated and require assistance from an experienced attorney.
Some individuals opt to challenge beneficiary changes on the grounds that the insured was forced or otherwise pressured into making it, or because fraud has taken place. Anyone looking to challenge beneficiary changes should gather proof in support of their argument before going before the courts.
Federal laws also factor into life insurance beneficiary disputes, such as Employee Retirement Income Security Act (ERISA) policies that can have different rules than state laws regarding beneficiaries. An experienced attorney can review your policy and applicable laws to see if there are valid grounds to contest a beneficiary.
As part of a plan to reduce beneficiary disputes, regularly reviewing policies with your family is the best way to ensure money goes where it should – rather than end up with strangers. Our life insurance attorneys can review your current beneficiary list and suggest changes so as to stay compliant with state law.
5. Represent Yourself
When an individual buys life insurance they have the freedom to name whomever they would like as their beneficiary – this can include anyone from people, charities and trusts to estates and trusts. A beneficiary will only receive their death benefit upon the policyholder passing away and must submit a beneficiary change form with their insurance provider for acceptance before being changed by them. If someone feels their current beneficiary selection is inappropriate then they can file suit to challenge and potentially change them and be designated instead as one of their replacement beneficiaries.
Beneficiary disputes often stem from feelings of coercion or undue influence by another. If a family member believes that someone exerted pressure on an insured to change their beneficiary, this could provide grounds for contesting it; this case would require strong proof that this undue influence had an effect.
Beneficiary disputes often arise because an insurer did not update their beneficiaries after experiencing significant life changes such as divorce, remarriage or having children. Family of the deceased might have been unaware that an ex-spouse was still listed and feel entitled to some portion of the death benefit.
Life insurance settlements do not need to go through probate; instead, insurers distribute proceeds directly to beneficiaries named in the policy. But if there are disputes surrounding one or more beneficiaries named on an insurance policy, that can delay settling an estate and cause financial strain for those left behind. It is crucial that an experienced life insurance beneficiary disputes attorney be consulted early in order to avoid delays and potential financial strain on heirs of deceased individuals. To help with these matters.