When married individuals purchase life insurance, they almost always name their spouse as the beneficiary. It’s a logical and loving choice—life insurance provides financial protection for the one you leave behind. But what happens when that relationship dissolves?
With nearly half of all marriages in the U.S. ending in divorce, it's not uncommon for individuals to want to change their beneficiary to exclude a former spouse. However, doing so during or after divorce can trigger legal complications that may completely alter who receives the death benefit.
How Divorce Can Affect Life Insurance Rights
There are two primary legal mechanisms that can interfere with a policyholder’s freedom to change their beneficiary designation:
1. Financial Restraining Orders During Divorce
In states like Massachusetts, a financial restraining order is automatically issued when a divorce case is filed. These orders freeze both spouses' financial assets and prohibit major financial changes—including life insurance beneficiary changes—until the court says otherwise.
Unfortunately, many policyholders ignore these restrictions and submit Change of Beneficiary forms anyway, often assuming the insurer won't find out. While a life insurance company might process the change, that doesn’t mean it will hold up if the insured dies during the divorce proceedings.
If both the ex-spouse and the new beneficiary submit claims, the insurer will likely:
Refuse to make a decision
File an interpleader lawsuit
Ask the court to determine the rightful recipient
In these cases, the court typically upholds the restraining order and awards the policy proceeds to the original spouse named in the policy. The new beneficiary may walk away with nothing—regardless of the policyholder’s true wishes.
Tip: If your state issues automatic financial restraining orders, speak with your divorce attorney before changing any life insurance documents.
2. Divorce Decrees That Restrict Beneficiary Changes
It’s common for a divorce decree—particularly in cases involving children—to require that a parent maintain life insurance for the benefit of their kids. Courts may:
Order that a spouse remain the policy beneficiary until the child reaches a certain age
Restrict the policyholder from naming a new spouse or unrelated party as beneficiary
The life insurer usually won’t be aware of these restrictions unless notified. If the policyholder changes the beneficiary and dies before the decree’s terms are fulfilled, it almost always leads to a legal dispute.
Real Case Example:
A man named Joe was required by his divorce decree to keep his ex-wife, Kathy, as beneficiary until their son turned 18. Two weeks before his son’s birthday, Joe changed the beneficiary to his new wife, Jan, and tragically died in a car crash one week later.
Legally, Jan should not have received the payout. But due to the timing and equities involved, a lawyer helped negotiate a mediated settlement where:
Jan received the majority of the policy benefit
Kathy received a small portion reflecting her remaining week of entitlement
Without legal intervention, Jan likely would have received nothing.
Why This Matters
If you’re divorced or going through a divorce, don’t assume you have complete control over your life insurance beneficiary. Courts and contracts can limit those decisions. Life insurance disputes involving divorce, restraining orders, or beneficiary changes require careful legal strategy and documentation.
Don’t Wait—Talk to an Attorney
These cases often come down to technicalities, timing, and legal interpretation. If you've received a life insurance claim denial—or suspect one is coming—don’t wait to act. When you need an Arkansas life insurance lawyer call us.
Call our firm today for a free consultation. We’ll review your situation and let you know whether you have grounds to challenge the denial. If we take your case, you pay nothing unless we win. We’ve helped countless clients navigate complex life insurance disputes, and we’re here to help you too.