Federal Employees Group Life Insurance provides essential coverage for many federal workers, but the rules surrounding beneficiary changes can lead to serious complications. This is especially true when state court orders, such as those issued during divorce proceedings, seem to conflict with federal regulations. If you are involved in a dispute over FEGLI benefits, knowing how federal law interacts with state mandates is essential. If you have a Nevada life insurance claim problem call us.
When State Court Orders and FEGLI Designations Collide
State courts often issue orders requiring a federal employee to keep a former spouse or child as the beneficiary on their life insurance policy. However, under FEGLIA, federal law takes priority. Even if a state divorce decree orders a spouse to remain the beneficiary, FEGLI will pay the benefits to whomever is listed on the most recent federal designation form.
In one case, a retired federal employee changed his beneficiary from his former spouse to his new wife after a divorce, despite a court order requiring him to keep the former spouse on the policy. When he passed away, the benefits were paid to the new wife, not the ex-spouse. The court order was deemed unenforceable against FEGLI’s federal rules. This left the former spouse without the funds she had expected, despite what the state court had decided.
Beneficiary Changes Made by Someone with Power of Attorney
Some families assume that a person holding power of attorney can make life insurance changes on behalf of an incapacitated policyholder. Under state law, that might be possible for certain private policies, but FEGLI is different.
The FEGLIA statute does not allow anyone, not even someone with full power of attorney, to submit a beneficiary change. In one case, a daughter used a power of attorney to name herself as beneficiary of her father’s FEGLI policy while he was in a memory care facility. After his death, the claim was denied. The Office of Federal Employees' Group Life Insurance found that the designation was invalid because the father did not sign it himself.
Claims like this often require legal intervention to challenge what appears to be manipulation or invalid paperwork.
FEGLI and Community Property Disputes
In community property states, surviving spouses often believe they are automatically entitled to a share of any life insurance purchased during the marriage. While this may be true for some types of policies, FEGLI proceeds are controlled by federal law, which looks only at the named beneficiary.
One widow in Texas filed a claim for her late husband’s FEGLI benefits. He had named his sister as the beneficiary years earlier and never updated the form. Although Texas law generally grants the surviving spouse half of any marital property, the federal agency paid the entire benefit to the sister. The widow's legal challenge failed because the designation was properly completed and on file with the Office of Personnel Management.
These cases show how essential it is to keep FEGLI forms updated—community property rights will not override a valid designation under federal law.
What Happens When No Beneficiary Is Named
If a FEGLI policyholder dies without a named beneficiary, the federal government uses a strict order of precedence. This order does not change based on family wishes, handwritten notes, or state laws.
In one instance, a man with no surviving spouse or children had never completed his FEGLI beneficiary form. His long-term partner expected to receive the proceeds, but under FEGLI rules, the funds went to his elderly mother. The partner attempted to contest the distribution in probate court but was unsuccessful because FEGLIA’s rules took priority.
Final Thoughts
FEGLI disputes can be emotionally and financially overwhelming—especially when federal law overrides state court decisions or when changes are made improperly. These are not simple beneficiary disputes. They often involve strict technical rules, and a mistake on a form can have major consequences.