Often, people ask whether they can change a beneficiary on their life insurance policy. The answer to this question depends on several factors. You can change the beneficiary on your life insurance policy whenever you want, and countless times. However, your life insurance company may require that you meet certain conditions or make specific actions when you change the beneficiary.
Read about life insurance beneficiary rules
Unfortunately, in many cases of life insurance claim denials, those who apply for a change of a beneficiary do not take all the appropriate steps in the process in order to finish the change. They generally first apply for a change in the ownership of the policy. But the process does not stop here. To change a beneficiary, the application for a change needs to be filed with and approved by the insurance company. Then the insurance company needs to send the endorsed copy of the change of the beneficiary application to the new beneficiary. That document is very important and serves as the basic evidence of the new beneficiary status.
However, all too often, through the negligence of an insurance agent or for other reasons, the endorsed copy never reaches the beneficiary. When the insured dies, the insurance company may claim that the beneficiary had never been changed, even though the change in ownership was completed. This is a complex situation and may require a thorough investigation by an experienced life insurance attorney.
Irrevocable Beneficiary Designation
When you applied for the insurance, you may have made the beneficiary designation irrevocable. This means the beneficiary cannot be changed without the consent of that same beneficiary. The policy itself will indicate whether or not a beneficiary is irrevocable. While this arrangement is sometimes desirable for estate planning purposes, the legal status of an irrevocable beneficiary is not clear. Some may consider an irrevocable beneficiary as a co-owner of the policy; therefore, the beneficiary's consent is needed to exercise any policy rights. On the other hand, others may contend that an irrevocable beneficiary's consent is needed only for exercising a change of beneficiary. This may situation compromise the beneficiary's rights if the policy owner exercises other rights, such as surrendering the policy or permitting it to lapse. Due to the vague legal status of an irrevocable designation, it is usually preferable to use revocable beneficiary designations. If you need a life insurance lawyer, call us today.