One of the most common and emotional life insurance disputes arises after divorce. The insured passes away. The policy still lists an ex spouse as beneficiary. The family assumes the designation is invalid.
In non ERISA life insurance policies, that assumption can be right or wrong depending on a few critical factors.
Why this issue comes up so often
Beneficiary designations are easy to forget. Divorce is disruptive. Life insurance paperwork is rarely top of mind once a marriage ends.
Many people assume divorce automatically removes an ex spouse from everything. That is not always true.
Life insurance operates under contract law, not assumptions.
The starting point is state law, not fairness
For individually owned, non ERISA policies, many states have adopted revocation on divorce statutes. These laws generally provide that divorce automatically revokes a former spouse’s beneficiary designation.
The idea is simple. Most people would not want an ex spouse to receive life insurance benefits after divorce unless they took steps to reaffirm that choice.
But the statute is only the starting point.
Not all states treat this the same way
Revocation on divorce laws vary significantly by state. Some apply broadly to life insurance. Others apply only to wills and probate assets. Some contain exceptions that swallow the rule.
There are also states that require specific language in the policy or divorce decree before revocation applies.
This variation is why these cases often turn into litigation rather than quick claim decisions.
Policy language can override the statute
Many life insurance policies contain beneficiary provisions that interact with state law in important ways.
Some policies require a written change of beneficiary regardless of divorce. Others contain language incorporating state revocation statutes by reference.
Courts often analyze whether the policy expressly contemplates divorce or whether it defers to governing law. The outcome can hinge on a few lines buried in the contract.
Divorce decrees matter more than people realize
A divorce decree can control the outcome even when the policy still names an ex spouse.
If the decree requires the insured to maintain life insurance for the benefit of the former spouse or children, courts may enforce that obligation. In those cases, the ex spouse may still recover even if revocation statutes would otherwise apply.
On the other hand, a decree that is silent on life insurance may strengthen the argument that the designation should be revoked.
Timing can decide the case
When the policy was issued matters. When the beneficiary was named matters. When the divorce occurred matters.
Some revocation statutes apply only to beneficiary designations made before divorce. Others apply regardless of timing.
If the insured reaffirmed the beneficiary designation after divorce, even informally, that can change the analysis entirely.
Why insurers often file interpleader
When faced with competing claims from an ex spouse and family members, insurers rarely choose sides.
Instead, they often file an interpleader action and deposit the policy proceeds with the court. This shifts the fight to the claimants and protects the insurer from liability.
Interpleader is common in ex spouse disputes because the law is fact specific and state dependent.
What beneficiaries should not assume
Do not assume the named beneficiary automatically wins. Do not assume the ex spouse is automatically disqualified. Do not assume the insurer will resolve it for you.
These cases turn on statutes, contract language, and court interpretations that are not obvious from the policy alone.
The practical takeaway
In non ERISA life insurance cases, an ex spouse still listed as beneficiary does not automatically control the outcome. Revocation on divorce laws, policy language, divorce decrees, and timing all play a role.
What controls is not what seems fair. It is what the law and the contract say when read together.
Understanding those rules early can prevent costly mistakes and determine whether a claim should be contested or paid.