A power of attorney is supposed to help during difficult times.
Instead, it often becomes the trigger for denied life insurance claims, frozen benefits, and bitter family disputes.
Insurance companies scrutinize actions taken under a power of attorney with extreme skepticism. Even well-intentioned decisions can be challenged later, especially when they affect beneficiaries, policy ownership, or premium payments.
Here are ten common ways a power of attorney turns into a life insurance disaster.
1. Changing Beneficiaries Without Clear Authority
Many powers of attorney do not explicitly authorize beneficiary changes.
Even when they do, insurers often reject changes made by an agent unless the document contains very specific language. Families later discover that the “new” beneficiary was never recognized, leading to interpleader lawsuits or outright denials.
Good intentions do not override policy requirements.
2. Letting Policies Lapse While Acting as Agent
Agents under a power of attorney sometimes assume premiums are being handled automatically.
They are not.
If payments stop and the policy lapses, insurers typically deny claims regardless of who was responsible. The agent may face accusations of negligence, and beneficiaries are left without coverage.
This happens frequently when bills are scattered across accounts or when automatic drafts fail.
3. Converting or Surrendering Policies Near the End of Life
Some agents convert group policies, surrender cash value, or alter coverage while the insured is critically ill.
Insurers closely review these transactions. If they believe the change was not in the insured’s best interest or exceeded the agent’s authority, they may void the transaction or deny benefits entirely.
What seemed like a practical decision can erase a death benefit.
4. Signing Applications or Health Forms on Behalf of the Insured
When agents sign applications, reinstatement forms, or health questionnaires, insurers often claim misrepresentation later.
Even minor inaccuracies can be blamed on the agent, and the insurer may rescind the policy after death. Families then learn that a form signed under a power of attorney became the basis for denial.
5. Updating Contact Information but Not Beneficiaries
Agents frequently update mailing addresses, email accounts, or phone numbers while overlooking beneficiary designations.
As a result, lapse notices or policy changes go to the wrong place, and beneficiary records remain outdated. After death, insurers rely on old designations and pay the wrong person or freeze the claim in dispute.
6. Using the Power of Attorney After Death
A power of attorney automatically terminates at death.
Yet agents sometimes continue communicating with insurers, submitting documents, or making requests after the insured has passed. Insurers then reject everything submitted and may question the legitimacy of earlier actions.
This procedural mistake can delay claims for months.
7. Failing to Follow Policy-Specific Procedures
Life insurance companies often require their own forms for beneficiary changes, ownership transfers, or premium adjustments.
Submitting a general power of attorney alone is rarely enough. If the agent does not follow carrier-specific procedures, insurers later argue that no valid change ever occurred.
Families assume paperwork was completed when it was not.
8. Creating Conflicts Between Estate Plans and Insurance Policies
Agents sometimes try to “fix” estate planning issues by changing life insurance beneficiaries to match wills or trusts.
Life insurance does not follow wills.
If beneficiary changes conflict with existing estate documents or were made improperly, insurers may file interpleader lawsuits and let courts sort it out. This can delay payment for years.
9. Acting Outside the Scope of Authority
Many powers of attorney limit what the agent can do.
They may allow bill paying but prohibit gifting, beneficiary changes, or ownership transfers. Insurers review these documents carefully. If the agent exceeded their authority, every related transaction can be reversed.
Coverage that seemed secure disappears.
10. Triggering Suspicion of Undue Influence
When major life insurance changes occur shortly before death, insurers often investigate for undue influence.
Even loving caregivers can be accused.
If insurers suspect coercion or self-dealing, they may freeze the claim and force beneficiaries into court. Families then face expensive litigation on top of grief.
Why Power of Attorney Issues Are So Dangerous in Life Insurance Claims
Life insurance companies treat powers of attorney differently than banks or healthcare providers.
They apply strict policy language, narrow interpretations, and aggressive post-death reviews. Actions taken under a power of attorney are frequently second-guessed, especially when money is involved.
What feels routine during life becomes highly suspect after death.
Final Thoughts
A power of attorney can protect someone during incapacity, but it can also create serious problems for life insurance benefits if handled incorrectly.
Many denied claims stem from simple misunderstandings about authority, paperwork, or timing. Others arise because insurers retroactively challenge decisions made under pressure.
If a life insurance claim is denied after actions were taken under a power of attorney, the details matter. Reconstructing authority, intent, and compliance with policy procedures is often essential to reversing the denial.
Understanding these risks early can help families avoid losing benefits that were meant to provide security when it matters most.