Life Insurance Lawyer Maryland
Whether you reside in: Elkton; Bowie; Gaithersburg; Rockville; Frederick or Baltimore; our life insurance attorneys who live and work here in Maryland are here to help resolve your delayed or denied life insurance claim.
COVID-19 UPDATE: Our Maryland life insurance attorneys are now handling numerous COVID-19 Coronavirus denied life insurance claims.
The importance of up-to-date life insurance beneficiaries
Most life insurance policies are relatively simple. The insured obtains a policy and pays insurance premiums to keep that policy active. In the event the policyholder dies and his manner of death is not subject to any policy exclusion (such as suicide), then his designated beneficiary will receive a death payout in the amount called for in the policy. At least, that is how it is supposed to work.
In reality, however, things are not always that simple. Many people obtain a life insurance policy, name a beneficiary under the policy, then never really think about the policy again other than to make premium payments from time to time. In the meantime, all sorts of life events can occur that would make the policyholder wish he had paid more attention to what would happen to policy proceeds when he passed away.
As attorneys who specialize in the wrongful denial of life insurance claims, we see these issues arise all the time. Often, we are called upon to fight for the rights of a contingent or unnamed beneficiary who believes the insured’s policy did not express his true intentions at the time of death. While we can often successfully contest claim denials issued against these individuals, the best course is for policyholders to regularly revisit their policies to ensure their current intentions are clearly expressed.
This article explores three important life events that underscore the importance of changing beneficiary designations to match current intent. Two of those scenarios also highlight how critical it is for policyholders to name a contingent beneficiary. We hope these vignettes serve as a reminder that life insurance policies are only as good as your effort to keep them up-to-date.
Naturally, when most married people obtain a life insurance policy, they name their spouse as a beneficiary. Yet, in truth, 40 to 50% of American marriages end in divorce. While many divorce decrees mandate what should happen to life insurance policies held by the spouses, some people forget to include them in their asset lists. When they later die, the person they least want to benefit from their death ends up being the person still named as a beneficiary.
We see cases all the time where a divorced person simply forgets to change his beneficiary under the policy. This happens even where there are no divorce-related restrictions on changing the beneficiary and where the policyholder later remarries another person. Not surprisingly, these cases often end up in a nasty lawsuit between the named beneficiary (the first spouse) and the person who is likely the intended beneficiary (the current spouse).
We’ve seen these cases go both ways, but generally speaking, courts will uphold the express terms of the policy. In other words, the ex-spouse is likely to be the person who receives the benefit upon the policyholder’s death.
Note, however, that in cases where the policyholder failed to ever name a beneficiary at all, the ex-spouse is unlikely to receive policy proceeds. Rather, the death payout will be distributed as part of the policyholder’s estate.
Ultimately, the best course of action is to revisit your life insurance policy’s beneficiary designations as soon as your divorce is finalized. If the divorce decree mandates that certain persons be designated – the ex-spouse or the couple’s children, for example – then those instructions should be followed to the letter. If not, name someone who won’t have you turning in your grave when it comes time for your life insurance company to make a policy payout.
Beneficiary pre-deceases the policyholder
This is another common scenario where people forget to undertake the important task of changing their life insurance beneficiary designations. Imagine a childless couple where the husband has a life insurance policy naming his wife as the sole beneficiary. What happens if she passes away before him and he fails to change his beneficiary designation? In most states, his life insurance proceeds would be distributed as an estate asset. In many cases, however, that means those dollars end up in the hands of someone the policyholder never would have chosen.
This situation underscores the importance of naming a contingent beneficiary. Under most policies, the contingent beneficiary only recovers the life insurance proceeds if the primary beneficiary pre-deceases the policyholder. While it can be uncomfortable for couples to go through the process of naming contingent beneficiaries, it is a critical step toward protecting the policyholder’s full and true intentions.
Beneficiary kills the policyholder
In one final scenario that is (thankfully) less common than the other two, courts are sometimes called upon to decide what happens to life insurance proceeds when the beneficiary is deemed to be the person who killed the policyholder. What happens then?
Most states have what are known as “slayer statutes.” These laws basically prevent a killer from benefitting financially from their act of ending another person’s life. This means they won’t collect life insurance proceeds (even if they are the named beneficiary) and they won’t collect on any inheritance set aside for them in the deceased’s will.
Again, this is a scenario where having a contingent beneficiary is critical. Without naming that alternate beneficiary, life insurance proceeds will likely end up in the hands of an heir that may or may not be a match for the policyholder’s intentions.
In our line of work, we see fights over improper beneficiary designations all the time. While we are happy to fight for the rights of deserving beneficiaries (and have a very successful record at doing so), the best course for all life insurance policyholders is to simply revisit their designations any time a major life event occurs. Ultimately, clear and current beneficiary designations are the safest way to ensure your final wishes are carried out.
If you have received a life insurance claim denial on the basis that you are not the proper beneficiary, we may be able to help you. Call us today for a free consultation. We’re here to help.
- Number one is a misrepresentation on the application. This typically involves failing to disclose a medical condition. However, we can get over this hurdle the majority of the time.
- A lapse of a life insurance policy is probably second most common. What happens is that the insured gets sick and misses a payment or two. These are tough, but often we can get these claims paid.
- Probably third is the type of death exclusion. This could be a suicide or it could be a self-inflicted injury. Murder is another exclusion. Health again can fall under this exclusion. We often win suicide exclusions as we cite case law that the death was actually accidental.
- A very common exclusion is the alcohol exclusion. The insured may have been killed in a car crash, but the autopsy revealed alcohol in the person’s system. We have many legal briefs to combat this exclusion.
- Heroin and opiates or illegal drug exclusion is one of the biggest now. With the opioid crisis, there are tens of thousands of deaths.
- Prescription drug overdose exclusion may involve an overdose of medicine or taken medicines that are contraindicated.
- An ex-spouse being cut off from life insurance benefits is a big one. We actually have a half dozen ways to get over this hurdle.
- Having a spouse not listed as a beneficiary is another reason for denial
- Having a child not listed as a beneficiary is one too.
- Having only a primary beneficiary who is deceased is another.
- On an AD&D (accidental death and dismemberment) life insurance policy, a fall not being considered an accident is extremely common.
- The insured’s age not being correct on the initial application is a reason for denial.
- Having the wrong social security number listed is common.
- An autoerotic asphyxiation exclusion is an easy one for us to beat.
- An omission on the application is a big reason for denying a life insurance claim, but we have legal briefs to this effect.
- Not providing the required documents to the insurance company after death is a reason.
- Information which is argued to not be correct is one.
- When there is a dispute between two or more beneficiaries, an interpleader may occur, and we always get these resolved quickly.
- A beneficiary not named is a reason for not paying it out.
- A life insurance policy may be transferred from one company to another by the employer which causes major problems.