Change of life insurance beneficiary by spouse
Life insurance is a critical part of securing your family’s future and so many rely on it as the lifeline for those who they love long after they are gone. Few people believe the worst will happen earlier than in very old age but, sadly, there is the possibility that a person can die young or even relatively young in their prime earning years leaving their family, friends, or loved ones with no economic recourse following the loss of monetary support and struggling to pay bills that emanate from medical treatment and that emanate from daily obligations such as rent, food, and the day to day costs that we all face. For so many, the only true salvation is having a life insurance policy that they know that their family, friend, or loved ones can rely on.
When the person who is the insured on the life insurance policy is married, there are a few questions that naturally rise to the top. Does the spouse automatically get everything of the deceased’s, including the life insurance policy even if they are not listed? Does a life insurance policy automatically become community property if acquired during the marriage even if the spouse is not listed? While there may be different answers depending on state law, one of the questions that many ask is: can a spouse change the beneficiary on a life insurance policy? Below, we’ll provide some answers as to whether a spouse can change the beneficiary on a life insurance policy and what to do if you have questions about this critical question.
What is a life insurance policy?
A life insurance policy is an insurance policy issued on the life of the insured. In practice, this means that when the insured – who forms the basis of the policy – dies, then the amount of money on the policy is paid out as long as the death meets the terms of the policy. For example, if the insured dies by his or her own hand such as committing suicide, there are many policy exclusions that prevent a payout. Another reason there would not be a payout if is the insured dies of any cause either before the policy goes into effect or after the policy expires as there is often a term of length of the policy of a year or multiple years. This can impact the very foundation of eligibility of any beneficiary making the question of if a spouse can change a beneficiary on a life insurance policy irrelevant in the short or long term for anyone who has a stake in the benefits of the policy.
What is a life insurance policy beneficiary?
The beneficiary of a life insurance policy is any person or organization that the insured designates. The insured has the ability to designate the beneficiary, the person receiving the payout from the life insurance policy, regardless of whether the insured is married or not. The vast majority of life insurance policies allow an insured person to designate multiple beneficiaries which is not uncommon when the insured has remarried and wants to designate his or her new spouse in addition to any children they may have or other family members who they believe are deserving of financial support from the life insurance policy. Additionally, a life insurance policy insured can designate an organization as a beneficiary and some often do, especially for very sizable life insurance policies. For example, of a $5 million life insurance policy, an insured may wish to designate a university or other charitable organization as a $1 million beneficiary to provide for scholarships or other needed services. Given the money at stake, it’s not surprising that there is a question surrounding whether your spouse can change a beneficiary on a life insurance policy.
Can I have a backup beneficiary or beneficiaries?
Yes, you can have another beneficiary in case your main beneficiary is unable to receive the funds due to a variety of circumstances. You can list a few beneficiaries as secondary beneficiaries. This is known as primary beneficiaries – the person who you intend to receive the amount of money emanating from the policy – and contingent beneficiaries – the people who will receive money in the event the primary beneficiary is unable to receive the money or elects not to for any reason. The fluidity inherent in the ability to pick primary and contingent beneficiaries demonstrates why a spouse’s ability to change a beneficiary on a life insurance policy is of crucial importance to the insured.
Can my spouse change the beneficiary on a life insurance policy?
In a word, no a spouse cannot change the beneficiary on the insured’s life insurance policy on their own without the insured’s explicit approval. You are free to name the beneficiary or beneficiaries of your choice which may or may not include your spouse. However, in some community property states, a spouse may have to waive his or her rights to the proceeds of the policy before any beneficiary receives the amount intended for or due to them. One of the ways to ensure all of your wishes are followed in any state is to draft a pre or post-nuptial agreement that lays out your spouse’s right to any property, including a life insurance policy or policies, that the insured may have. This will ensure that your spouse is aware of their rights and do not try to change the beneficiary on a life insurance policy belonging to the insured.
What do I do if I have questions about a spouse’s ability to change a beneficiary on a life insurance policy?
No matter what life insurance policy questions you have, including a spouse’s ability to change a beneficiary on that policy, contact our experienced attorneys today for help with life insurance related questions. Our office can help guide you toward the correct set up so your life insurance policy reflects your priorities and the right people are getting the help they need according to your wishes.