A life insurance beneficiary cannot be changed after the death of the insured individual. If you die while a change is being processed, the insurer will choose who receives the benefit.
Choosing who will get your assets or the payout (known as a “death benefit”) from your life insurance policies is an important decision to make because a beneficiary designation cannot be amended or corrected after you die.
It is critical to update your beneficiary designations if your circumstances change (marriage, children, divorce, etc.). Here’s some basic beneficiary information that might help.
Who is a Beneficiary?
A beneficiary is the individual or entity you lawfully choose to receive the benefits of your financial products. The death benefit is the amount of money paid out by your life insurance policy if you die. This is the total amount of money in your retirement or investment accounts.
Can Anybody Be Named as a Beneficiary?
Your beneficiary may be an individual, a charity, a trust, or your estate. Almost anyone can be nominated as a beneficiary, though your state or the source of your benefits may have restrictions.
Before naming your beneficiary, ensure that you have researched the legislation in your state. If you live in some states, you may be obliged to name your spouse as the principal beneficiary and designate him or her to get at least half of the benefit. Some states allow you to name someone else with your spouse’s written permission.
Who Can Claim a Life Insurance Beneficiary?
The right to oppose a life insurance beneficiary selection is typically reserved for people who have a real and direct stake in the policy’s profits. Here is a list of people who normally have the right to contest a life insurance beneficiary:
• Policyholder’s estate
If the life insurance proceeds were supposed to be part of the total estate, the estate’s executor or administrator may step forward to oppose the beneficiary designation.
• Co-beneficiaries
If there are numerous beneficiaries and there is suspicion of fraud or undue influence, a co-beneficiary might challenge the life insurance beneficiary designation.
• Spouses or ex-spouses
Depending on the provisions of a divorce judgment or marital property rights, a current or former spouse may have grounds to challenge the beneficiary of a life insurance policy. This is particularly true if spouse-beneficiary regulations are not fulfilled.
• Family icon: children of the policyholder
Children may have the right to appeal if they were excluded as beneficiaries, particularly if a new spouse is the primary beneficiary of the life insurance policy.
• Paying off a loan icon: Creditors
If the dead had considerable debts, creditors may fight a life insurance beneficiary designation in order to collect on those debts.
• Other entities with valid claims
Business partners, charitable organizations, or anyone designated in a will or earlier policy but not included in the most recent policy may fight the life insurance beneficiary designation.
Anyone considering appealing a life insurance beneficiary should consult with a life insurance claims lawyer.
How to Change a Life Insurance Beneficiary After Death
A dispute can result in a change in a life insurance beneficiary. This is a complex legal process that may result in a court-ordered beneficiary modification.
• Identifying grounds for the contest
The individual who seeks to contest the life insurance beneficiary designation must first assess whether there are legitimate grounds for the contest, such as suspected fraud, coercion, or an invalid beneficiary designation.
• Filing a lawsuit
The contesting party sues the insurance company and, presumably, the named beneficiary of a life insurance policy. The complaint should include arguments and facts to support their claim.
• Court evaluation
The court considers the evidence and arguments. If the dispute is valid, the court may require the insurance company to pay the death benefits to a different beneficiary.
• Implementing the court order
The insurance company must then comply with the court’s order and pay the death benefits to the new beneficiary chosen by the court.
Frequently Asked Questions
Who has the authority to change the beneficiary following death?
A life insurance beneficiary can only be changed after death through legal action and a court ruling. Those who can challenge a life insurance beneficiary include the policyholder’s estate, co-beneficiaries, spouses, children, and creditors.
What is the definition of an immutable beneficiary?
An irrevocable beneficiary is a person or entity appointed to receive the assets of your life insurance policy and cannot be changed or withdrawn without their approval.
Can you change a beneficiary on a life insurance policy?
During their lifetime, the policyholder can normally modify or remove a life insurance beneficiary. However, people who want to make such a shift should be aware of the potential complications. Beneficiaries must be changed via the proper procedures with the insurance company.
