Life Insurance Lawyer Ohio
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What are some ways a life insurance beneficiary change after death can be contested?
A life insurance beneficiary change after death can be contested for various reasons. Here are twenty ways a life insurance beneficiary change after death can be contested:
- Lack of capacity: The beneficiary change may be challenged if the policyholder was not of sound mind and didn't have the capacity to make such decisions.
- Fraud: The beneficiary change may be challenged if it was obtained through fraudulent means, such as forging the policyholder's signature or manipulating the policyholder.
- Undue influence: The beneficiary change may be challenged if the policyholder was coerced, manipulated or unduly influenced to make the change.
- Duress: The beneficiary change may be challenged if the policyholder was forced to make the change under duress or threat of harm.
- Mistake: The beneficiary change may be challenged if the policyholder made a mistake while changing the beneficiary or didn't understand the implications of the change.
- Incapacity at the time of the change: The beneficiary change may be challenged if the policyholder was incapacitated or otherwise unable to make decisions at the time of the change.
- Invalid procedure: The beneficiary change may be challenged if the policyholder did not follow the correct procedures for changing the beneficiary.
- Ambiguity: The beneficiary change may be challenged if the policyholder's intentions were not clear or if the language used in the beneficiary designation was ambiguous.
- Timing: The beneficiary change may be challenged if it was made shortly before the policyholder's death, which may suggest that the change was not made with clear intention.
- Invalid form: The beneficiary change may be challenged if it was made on an invalid or outdated form.
- Unsigned or unexecuted form: The beneficiary change may be challenged if the form was not properly signed, witnessed, or executed.
- Invalid witnesses: The beneficiary change may be challenged if the witnesses were not qualified or not present at the time of signing.
- Revocation of prior beneficiary: The beneficiary change may be challenged if it did not properly revoke a prior beneficiary designation.
- Failure to update policy: The beneficiary change may be challenged if the policy was not updated with the new beneficiary designation.
- Dispute between beneficiaries: The beneficiary change may be challenged if there is a dispute between multiple beneficiaries.
- Conflict of interest: The beneficiary change may be challenged if the new beneficiary was in a position of conflict of interest or has a fiduciary duty to the policyholder.
- Lack of authority: The beneficiary change may be challenged if the person making the change did not have the authority to do so.
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Ohio Life Insurance Law
There are many circumstances under which a person obtains life insurance. For many people, a policy is issued as part of an overall employment benefits package. Still other people may acquire a policy in secret after being moved by the death of someone close to them. Perhaps most people get life insurance as a way to ensure their loved ones are financially secure after they pass away.
Regardless of the reason a person obtains a life insurance policy, one universal truth holds true: they must make a clear and unambiguous beneficiary designation if they want their intentions to be honored when they die. Importantly, this is an ongoing process. A life insurance policy, like any estate planning document, must be revisited each time a significant life event occurs. This could include marriage, divorce, the birth or death of children, and any other event that might impact the policyholder’s wishes.
As lawyers who specialize in the wrongful denial of life insurance claims, we often handle disputes regarding a policyholder’s intentions when it comes to his or her beneficiary designation. While we’re happy to fight these battles for the beneficiaries who are deserving of the intended benefit, it makes life easier for everyone if designations are made clear while the policyholder is alive.
This article explores a one scenario where a policyholder’s lack of clarity caused his intended beneficiary to lose all of the life insurance proceeds he undoubtedly wanted her to receive. While most of the articles on this site focus on cases where beneficiaries have had a claim denied, sued the life insurer, and then won in court, this is not such a case. Nonetheless, it serves as an important cautionary tale regarding the importance of keeping your life insurance policy front of mind and up to date as life changes occur.
A conflict between the policy and the will
One situation that we see with alarming frequency is this: an individual obtains a life insurance policy and faithfully pays premiums on that policy for years or even decades. During that time, several significant life changes occur yet the policyholder does nothing to change his policy so as to reflect those changes. An illustrative case is described below.
Bill was a real estate broker who married his high school sweetheart, Marla, when the two were 25 years old. They were married for 10 years and had two children. During that entire time, Bill had a life insurance policy that was supplied by his employer. It named Marla as his sole beneficiary.
By the time the couple divorced, Bill was only 35 years old. He wasn’t even thinking about estate planning at that point in his life. He continued to keep the same life insurance policy in place following the divorce, but rarely (if ever) thought about the policy since his employer paid all of the premiums.
When Bill was 43, he met a woman named Susan. While they never married, the two lived together and were a very loving couple. At that point, Bill was already experiencing some slight heart-related ailments and, as such, he decided to have his attorney draft a will. His will was relatively simple. It left 100% of his assets to Susan. Still employed by the same brokerage firm and still covered by the same life insurance policy he’d had since his twenties, Bill did nothing to update his life insurance policy. He actually forgot it even existed.
Unfortunately, Bill passed away in a car accident at the age of 45. As Susan sorted through all of his effects within his home office, she found a copy of his will, and a end-of-year statement from Bill’s employer that noted the amount the company had paid on his life insurance policy over the year prior. Susan didn’t have access to the policy itself but upon reading Bill’s will, it became clear to her that Bill intended for her to have all of his assets including, presumably, his life insurance proceeds. Consequently, she filed a claim for benefits with the insurer.
A claim denied with no real recourse
Sadly, Susan’s claim was denied by the life insurance company on the grounds that Marla was still the named beneficiary under Bill’s policy. This came as a shock to Susan because, in her opinion, Bill’s estate planning documents were exceedingly clear that she was to receive all of his assets. Since the will was a more recently-drafted document than Bill’s life insurance policy designation, it seemed logical that the more current document would reflect Bill’s true intentions.
Susan even went so far as to have Bill’s estate planning attorney call the life insurance company to argue the point. Because that attorney didn’t specialize in life insurance claim denials, however, he wasn’t familiar with the law of their state on this point. Simply put, the life insurance policy is a legally binding document and its terms take precedence over the terms of the will. In other words, there was no getting around Bill’s express designation of Marla as his beneficiary. Consequently, she was awarded the $100,000 death benefit called for in Bill’s policy.
As attorneys who specialize in the denial of life insurance claims, there is nothing that frustrates us more than a situation where the law binds our hands when we’re trying to help beneficiaries obtain life insurance proceeds the policyholder intended for them. In many states, however, the law on this point is clear and well settled. The life insurance policy trumps the will.
Because of that, sometimes we have to educate our readers on the steps they must take while they are alive to make sure their wishes regarding life insurance proceeds are carried out after they pass away. This is one of those situations.
If you have a life insurance policy and you want to control who receives the death benefit, then you need to remain diligent about changing your beneficiary designation to match your intentions. If you have questions about this or any other life insurance payout issue, please call us today. We’re here to help.