Challenging Life Insurance Beneficiaries: Your Legal Options Explained

Contesting a life insurance beneficiary is a complex and challenging process that often leads to lengthy and expensive legal battles. When a person purchases life insurance, they choose one or more beneficiaries to receive the insurance payment upon their death. However, disputes may arise, and any person with a valid legal claim can contest a beneficiary after the policyholder's death. This typically occurs when there is a question of whether the named beneficiary should rightfully receive the payment, or when the policyholder fails to update the beneficiary information after significant life changes. To contest a beneficiary, a legal court process must be initiated, and it is important to seek the assistance of an experienced attorney.

Remarriage

In some states, a divorce automatically revokes a beneficiary designation in favour of an ex-spouse. However, an ex-spouse may still have a valid claim to the benefits if they have a court order or divorce decree that obligates the insured to maintain the policy in their favour.

To avoid disputes, policyholders should review their insurance policy after major life events, such as remarriage, and make any necessary changes to their beneficiary designations. They should also follow the insurance company's procedures when making updates and inform previous beneficiaries of their removal from the policy.

Mental capacity of the policyholder

The mental capacity of the policyholder is a crucial factor when contesting a life insurance beneficiary. Disputes may arise if there are questions about the policyholder's mental state when they made changes to the beneficiary. This often occurs when changes are made during the policyholder's later years, especially if they are experiencing dementia or any illness that could impact their decision-making abilities. In such cases, the validity of the beneficiary change will be questioned, and it must be determined whether the policyholder had the mental capacity to understand the nature of the changes and the consequences of their actions.

To contest a beneficiary change based on the policyholder's mental capacity, it must be proven that the policyholder lacked the mental capacity to make informed decisions at the time of the change. This can be supported by presenting medical records or expert opinions that demonstrate cognitive impairment. It is also important to consider whether the change was made under undue influence or duress, which could indicate that the policyholder's wishes were not accurately reflected in the beneficiary designation.

In addition to the policyholder's mental capacity, other factors such as compliance with insurance company procedures and the timing of the change will also be considered during a dispute. To avoid disputes, policyholders should regularly review and update their beneficiary designations, especially after major life events, and follow the insurance company's procedures for making changes.

While contesting a life insurance beneficiary can be challenging, it is important to seek legal assistance and provide compelling evidence to support your claim. By doing so, you can help ensure that the policyholder's true wishes are honoured.

Forgery, duress, or undue influence

Contesting a life insurance beneficiary is a difficult, long, and expensive process. It requires a legal court process, and only courts have the power to overturn a life insurance beneficiary.

Last-minute changes to beneficiaries, especially sudden or unexpected ones, are a common indicator of foul play. These changes often occur when the policyholder is sick or dying and may not have the mental capacity to understand what they are doing. They may be pressured or coerced by a caregiver or someone with access to their insurance information, who then assists them in signing the necessary forms.

To contest a beneficiary change on these grounds, one must present evidence of mental and physical incapacity, undue influence, duress, or fraud. This can be challenging, and often requires the help of a lawyer.

In some cases, the policyholder's wishes should be carried out, even if they were not properly reflected in the beneficiary change. This can occur when the policyholder did not follow the insurance company's procedures for making changes or when there is evidence that the policyholder was unduly influenced or coerced.

Ineffective beneficiary changes

The insured's attempt to update the beneficiary may be ineffective if they die before the insurance company receives the updated designation and processes the change.

To change the beneficiary of a life insurance policy, the policyholder needs to contact their insurance company and fill out a change of beneficiary form. The form typically includes information such as the policyholder's name, the new beneficiary's name, and the reason for the change. Once the form is completed, it must be submitted to the insurance company for approval. The insurance company will review the form and inform the policyholder if the change has been approved.

However, if the insured fills out the change of beneficiary form but dies before the insurance company receives the updated designation and makes the change, the attempt to update the beneficiary is ineffective. In such cases, the beneficiary reverts to the previously designated individual.

To avoid ineffective beneficiary changes, it is essential to follow the insurance company's requirements and allow sufficient time for processing the change. Some insurance companies may require additional steps, such as witnessing or notarisation of the form. It is also crucial to keep your life insurance policy up to date, especially if your life circumstances have changed, such as getting married, divorced, or having a child.

Divorce

To avoid disputes, it is important to update beneficiaries after major life events such as divorce. It is also crucial to follow insurance company procedures when making beneficiary changes and to involve witnesses in beneficiary changes that may be controversial, such as replacing an ex-spouse with a new partner.

Frequently asked questions