Contesting a Life Insurance Beneficiary
Some individuals are aware that they are a beneficiary on a life insurance policy. The insured may have advised them of this. Many that are insured do this to create awareness. They want the beneficiary to know that there is a life insurance policy in place. Then upon the death of the insured the beneficiary can take the necessary steps to file the claim. It is not uncommon for a life insurance beneficiary to be contested. Meaning that someone will challenge the life insurance beneficiary's right to the claim
When Should Someone Contest a Life Insurance Beneficiary?
Disputing a beneficiary on an insurance claim is not an easy task. It should only be done when an individual feels that they have a right to do this. There are many times when the dispute can be valid. At the same time there are instances when it is not.
A Mistake Has Been Made
In many cases one or both spouses in a marriage will take out a life insurance policy to protect each other financially. In the case of the death of one of them. Then the surviving spouse has some financial security. But what happens if there is a divorce? Most often the insured will remember to change the life insurance beneficiary. Then there have been times where an individual has forgotten to do this. The insured may have gotten remarried. Now the current spouse has no financial security as a result of the mistake made by the insured. In this case the current spouse may want to contest the beneficiary. There may be a chance to fight the beneficiary in this case. In fact, many states have divorce laws that include nullifying the beneficiary in the case of a divorce. There is a much case law on this, and our life insurance law firm submits lengthy briefs so we can recover the full amount of the policies for our clients.
Assumption of Rights
It may be that the insured has named his children on the policy as beneficiary. But perhaps remarried and now has step children. The step children may feel they have a right to a portion of the insurance. Fighting a life insurance beneficiary can be difficult no matter what the circumstances. It is a form of written contract. In this case it might be extremely difficult to contest the beneficiary.
In general individuals will take out insurance policies on their accord. There are times that they are ordered to do so. For example, when a spouse gets a divorce and they have to pay spousal or child support. This is usually the main source of money for the spouse and children. In the event of death of the payer it leaves these individuals in financial hardship. To avoid this the courts will order the payer to take out a life insurance policy.
Intent of the Policy Holder
Contesting a life insurance beneficiary can sometimes arise because the individual contesting it feels that the insured was coerced into taking out the policy or changing the beneficiary. Or, they may feel that the insured was not in a proper state of mind when doing this. Then there are cases where the individual contesting feels that some other fraud has occurred.
These are a few examples of situations where contesting a life insurance beneficiary may arise.
The Insurance Company and Contesting a Life Insurance Beneficiary
The Insurance Company that provided the life insurance has to be very thorough at paying out the claim . When they are faced with someone contesting a life insurance beneficiary they cannot pay out the claim. What they will likely do is start a life insurance interpleader process. This means that they will put the claim in the hands of the courts to decide who the beneficiary is that is going to get paid. This is a expensive process as the life insurance beneficiaries have to present their case to the courts. It can be a long and drawn out process and often requires legal assistance in order to be able to present one's case through the courts.
If possible the individual that is contesting a life insurance beneficiary should at first try to see if this can be settled out of court. Whether the interpleader has been filed or will be filed shortly, our life insurance attorneys can step in and get it resolved.