Many people utilize the power of attorney document as a beneficial legal instrument to ensure that the life insurance proceeds get to the proper recipients. However, understanding it is not that simple. Beneficiaries risk unfairly losing their rights if a power of attorney is not utilized properly if the agent does not operate in the best interests of the person granting the powers.
What's a POA?
In the event that the principal, grantor, or donor is unable to act on their own, a power of attorney (POA) is a legal document that appoints another person (the agent) to act on their behalf.
When the original beneficiaries are deceased, POA might be a useful tool. A new beneficiary may be chosen by an agent having POA. After the insured passes away, the POA is no longer in force, and the agent is unable to make any changes. The insurer will transfer the life insurance payout to the decedent's estate if the life insurance policy has no designated beneficiary. It will go through probate and, if there is a will, be dispersed in accordance with it.
Can the POA holder be the life insurance coverage's beneficiary?
If the insured chooses to nominate a POA holder as the beneficiary of a life insurance coverage, it is possible. The spouse or a child of the insured is frequently given power of attorney. As long as the agent operates in the policy owner's best interests, there is no conflict of interest.
However, unless the agreement explicitly gives the agent this authority, the agent with a power of attorney cannot name themselves as the beneficiary of the life insurance.
Can an Agent Cash in the Life Insurance Benefit with a Power of Attorney?
The agent may cash in a life insurance policy on behalf of the policy owner if the POA agreement expressly authorizes this action and mentions the life insurance policy. Every time the agent acts on behalf of the insured, fiduciary obligations apply.
Can a POA Holder Revoke a Life Insurance Coverage?
Despite the fact that an agent with a POA has numerous powers, the agent cannot terminate a life insurance policy unless this authority is expressly granted in the POA form. You should consult a lawyer if you believe a policy that involved you as a beneficiary may have been canceled or converted unfairly to discover all the possibilities.
How Should You Respond if a Power of Attorney Causes Your Life Insurance Claim to Be Rejected?
You might be in jeopardy when it comes time to collect the death benefit if you are the beneficiary of a life insurance coverage that includes a POA.
To safeguard their interests in the event of incapacitation or disability, many people choose to grant POA over their life insurance policy. It is crucial for principals to specify a person they can trust in addition to precisely defining the areas agents can have influence over. If not, their intended recipients could suffer. While most agents work in the principal's best interests, it does happen occasionally for an agent to behave dishonestly and deprive the beneficiaries of their rights.
A power of attorney form is drafted in accordance with rigorous laws and rules. However, a POA document can be found to be invalid. Even if you are the primary beneficiary, if the insurer rejects your claim, your payouts will be denied. Or if a POA designates you as the beneficiary, you may dispute your claim. Beneficiary conflicts are a common outcome of this. Legal representation is best for resolving such problems.
POA Change of Beneficiary and Contesting a Life Insurance Beneficiary
Many times a family member or caregiver gets a POA, changes the beneficiary, and hides the papers from the beneficiary. Our life insurance lawyers can contest any beneficiary and win.