Life Insurance Beneficiary Disputes
People normally expect to have a life insurance claim paid promptly. Although insurance companies are oftentimes the reason claims are delayed, denied, form properly paid, this is not always the case. In some life insurance cases, multiple people may claim that they are entitled to a death benefit. It is important to obtain proper legal guidance when dealing with a life insurance beneficiary dispute.
There are several reasons why beneficiary disputes occur. Sometimes a beneficiary designation may not be clear or was never properly processed. Other times there may have been a sudden and unexpected beneficiary change that leaves people wondering why their loved one denied them a promised financial benefit. it is not uncommon for people to question whether the owner of a life insurance policy had the mental capacity to make a designation when he or she did. Sadly, we have also seen cases where beneficiary designations have been forced by others, forged, induced through lies, or changed through deception.
We always tell people to trust your gut when dealing with a beneficiary dispute issue. If you feel something fishy happened, you may be right. It is often worth investigating and making a claim when you believe it is right.
UNCLEAR BENEFICIARY DESIGNATIONS
Believe it or not, sometimes people are not careful when executing important legal documents. As we have seen, this is true for life insurance designation forms.
A life insurance designation form often is not all that former. It is not life a will, testament, or trust document that needs to be fully authenticated. Sure, some insurers require authentication through a notarized signature, but many do not. Even when they do, a notary is not there to make sure a person completes a form properly. Put simply, there are flaws in the system.
One example we have seen is when a beneficiary designation form lists “wife” as the primary beneficiary. However, what happens if the wife passes away before the owner of the policy or there has been a divorce and remarriage since the designation was made. Complicating this even more it is when provisions of the insurance code, estates code, in family law code apply to invalidate a person’s status as beneficiary following certain life events like divorce.
A person’s status as a beneficiary may also be impacted by wills, contracts, trust, and other documents carrier. Going back to the wife example, if she predeceases her husband, will the money go to a contingent beneficiary or the beneficiary of the wife’s estate.
There may be different interpretations to a beneficiary form that is from a policy issued by your employer and governed by federal law, versus a policy that you purchased directly from a company.
If you are involved in a beneficiary dispute, it is imperative to consult with an experienced life insurance attorney.
Competency Issues often Impact Beneficiary Designations
One of the more common issues we see with beneficiary disputes are issues concerning a person’s compentancy. This means someone is questioning if a person had the mental ability to understand the beneficiary designation that the made. It is not uncommon for people to challenge a change and beneficiary that occurred later in a person’s life. This is especially true when the person was suffering from a cognitive infirmity such as dementia or Alzheimer’s.
In most cases, challenging the competency of a person who has passed away requires the assistance of medical experts. These experts need to review the person’s medical records to provide an opinion if they had the cognitive ability to make the beneficiary designation that was made.
BENEFICIARY DISPUTES DUE TO EVIDENCE OF FRAUD, DECEIT, AND ABUSE
Sadly, people sometimes take advantage of the owner of a life insurance policy. This is particularly true, when a person is in their later years. Examples of fraud, deceit, and abuse include the following:
In many cases a person will either know or have an idea that they were listed as a beneficiary of a life insurance policy. Indeed, have owners of life insurance policies will often inform loved ones of that they are on their life Insurance policies and to expect something when they pass. If you are dealing with a potential life insurance dispute, you may have believed you were the intended beneficiary but surprisingly learned that you are not. If this is your situation, it is probably worth investigating it further.
Another common sign fraudulent or deceitful activity is when have a caretaker or person with close access is suddenly listed as the primary beneficiary. In these cases, information related to a person’s mental capacity is often highly relevant and useful to show have that they did not make a designation voluntarily.
HOW DOES AN INSURANCE COMPANY ADDRESS MULTIPLE CLAIMS?
When multiple people make a claim to a death benefit, insurance companies can handle it in one of a few ways. In most cases, the insurance company will investigate the claim and only pay the death benefit if there is clear evidence that one person is entitled. Most often, this requires there to be evidence that a competing claim is totally bogus.
Life insurance companies are often reluctant to pay a death benefit when there are multiple claims. An insurance company has an absolute duty to pay the correct beneficiary. When an insurance company makes the wrong conclusion about the correct beneficiary, it may have to payout the death benefit twice.
To avoid the risk of paying the wrong person, Insurance companies often file what is termed an interpleader complaint in either state or federal court. In an interpleader action an insurance company names the claimants to the death benefit as defendants. The insurance company will ask the court to permit it to deposit the death benefit in the court’s registry. By depositing the money in the court’s registry, the insurance company is acknowledging that it has an obligation to pay, but is unable to safely determine the correct claimant. Once in court, the claimants will then we need to make their claims for the death benefit. An experienced life insurance attorney will normally file a claim for declaratory judgment asking the court to find that it is entitled to the death benefit. Oftentimes, a court may issue a ruling about the correct beneficiary without going to trial. However, this normally only occurs when there is a straightforward legal question about who is entitled to the death benefit.
When there are disputed fact issues, such as if the person who died had the mental ability to make the designation, the case may proceed to trial unless there is a settlement.
WHEN SHOULD I HIRE AN ATTORNEY FOR A DISPUTED BENEFICIARY CLAIM?
If you are involved in a death benefit claim that has multiple claimants, it is advisable that you obtain legal representation. There is a strong likelihood that an insurance company will not pay you the death benefit. Many cases proceed quickly to court through an interpleader complaint. Interpleader cases can be highly technical with unique procedures that differ from other civil actions. Obtaining competent legal representation is often key to a good outcome.
Our law firm represents people in disputed life insurance beneficiary claims. We’ve had success resolving cases pre-suit resolutions as well as significant courtroom victories. We are committed to helping our clients present the best case possible and working with experts who can help maximize your likelihood of a good outcome. Please contact us today if you would like to schedule a free noncommittal consultation.
