You Could Still Get In Trouble If You Commit Fraud And Live Beyond The Contestability Period
Dont think youre free and clear if you live more than two years after the policy goes into effect. Insurance companies can still take action if fraud comes to light.
You could still be considered insurance fraud later.
One example is if you claimed you were a nonsmoker and then die from a smoking-related illness. You benefited from years of paying much lower premiums because the insurer though you were a nonsmoker. If the company finds out that you were in fact a smoker, the insurer could consider it fraud and decline paying the death benefit.
Can You Contest The Beneficiary Designation On A Life Insurance Policy Or Retirement Account
Here in Michigan, many people use beneficiary designations as a way to transfer some of their most important assets outside of probate including retirement accounts, life insurance policies, annuities, brokerage accounts, bank accounts, and other securities.
Indeed, for many estates, these nonprobate assets can constitute a large portion of what the decedent distributes to their loved ones.
Accounts with a beneficiary designation can have many advantages. They can help to streamline the probate administration process, and make it easier and quicker for your loved ones to start accessing necessary funds during a difficult transition. However, its important to keep in mind that transferring assets to a beneficiary through a pay on death or transfer on death designation is not always going to be seamless. There is certainly room for issues to arise including disputes and contests to the beneficiary designation.
Individuals may seek to contest a beneficiary designation on an IRA, life insurance policy, or other account for any number of reasons. However, while it is possible to contest a beneficiary designation, its crucial to note that this process isnt always cut-and-dry. This will be a legal matter, and will require working with an experienced attorney who can help you get a handle on the situation, understand all of your options, and represent your interests in court should it become necessary.
Legal Odds Against Those Disputing Life Insurance Beneficiaries
Whatever the reason, when a life insurance policy is disputed, it becomes a legal issue and a matter for the courts to decide, says Feldman. The life insurance companies can never decide for themselves whether the family members or challengers claim is legitimate and the beneficiaries should be changed. Only the courts can make that decision. After hearing the evidence, the court may decide to uphold the originally named beneficiaries or it could agree that the beneficiaries were legitimately updated. In the end, the insurance companies that issued the policies are going to go by whatever the court tells them, Feldman says.
In most cases, according to Feldman, it is not easy for those disputing beneficiaries to prove their case before a judge. An insurance policy is considered a signed contract that is irrefutable. It can be particularly difficult to prove fraud that the policyholder was coerced into changing a beneficiary by someone who only came into his or her life toward the end.
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Reduce The Chances Of Someone Contesting A Life Insurance Beneficiary
To reduce the chance of a beneficiary contest after their death, a policyholder may wish to take precautions, including:
- Updating beneficiaries after major life events or document that a lack of change was intentional
- Following insurance company procedures when changing beneficiaries
- Involving witnesses in beneficiary changes that may be controversial like replacing an adult child with a new spouse
After the policyholder’s death, opportunities to change a beneficiary or prevent a contest are minimal. People involved in these situations may wish to seek the advice of an attorney.
If you’re looking for life insurance coverage or simply want to learn more about your options, you can get a free plan quote online that allows you to compare different insurance plans from different companies. Or you can call to speak with a licensed insurance agent who can help you compare plans available where you live.
Getting Help When Disputing Life Insurance Beneficiary
Challenging a life insurance beneficiary is a complex and challenging undertaking. The best way to deal with this sort of problem is to avoid it in the first place. Encourage family members to review their life insurance policies regularly, to make sure the money will actually go to the person they intend to receive it. This should become a high priority after any major life change, such as marriage, divorce, a birth, or a death.
If you must take the issue to court, hire life insurance lawyers with a depth of experience in cases like yours. Choose a lawyer who will not recommend taking the first settlement offereven a poor onebut hold out for a skilled trial attorney who is ready to take your case into the courtroom if a fair settlement cannot be reached.
The attorneys at Life Insurance Law can provide the skilled legal representation your case demands. We can carry out the detailed investigation of your life insurance case to determine if undue influence, declining faculties, or coercion was used to assign a beneficiary. We are well versed in applicable state and federal laws that may give your challenge a fighting chance. We wont collect a fee unless you get paid first. Call us today at 531-7961 for a FREE consultation about your potential claim or to ask about any other life insurance legal matter.
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Challenging A Beneficiary Designation
When an account owner or policy holder passes away and their beneficiary designations are revealed, it is not uncommon for some complicated questions to come up and with them, the potential for significant disputes and disagreements.
What if the policy holders beneficiary designation for a life insurance policy is an ex-spouse, whom they havent spoken with in years?
What if a life insurance policy is changed in the last few months of an elderly persons life, to significantly benefit a new caretaker or significant other theyve only known for a very short period of time?
What if the actual beneficiary on a securities account doesnt match up with the wishes that your dad stated multiple times in person?
What if one child benefits from a parents substantial CD or brokerage account, while their siblings are all but forgotten?
These situations are more common than you might think and they reveal the potential pitfalls involved in executing beneficiary designations. To add fuel to the fire, remember that these designations broadly rely on terms agreed upon between the account holder and their financial institution. The types of documentation used and the levels of formal oversight required are not necessarily going to be standardized from place to place.
- Improper execution
- Lack of capacity
- Undue influence or duress
Who Can Change The Beneficiary On A Life Insurance Policy
The owner of the policy is the only person who can change the life insurance beneficiary. Usually, the person whose life is insured is the owner of the policy. But this isn’t always the case. It is possible to buy a policy on someone as long as there’s an insured interest. For example, a husband could buy a policy insuring his wife or vice versa. In this case, the policyowner would still have the authority to change the designated beneficiary.
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How A Policy Lapse Affects Contestability
If you fall behind on your premiums, your policy will eventually lapse, and youll have to reapply for life insurance to restore coverage for your loved ones.
In addition to higher premiums based on your older age and going through the underwriting process again, you’ll also start a new contestability period. If you conceal information in your new application and die during the first two years, your beneficiaries could lose out on the death benefit just as they would the first time around.
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Need Help With Your Life Insurance Beneficiary Claim
At Hackard Law we litigate California life insurance beneficiary cases these disputes often tie into undue influence and elder financial abuse. Litigation can be expensive and time-intensive. We always prepare for a tough litigation fight, but often the most favorable resolutions can be reached through pre-trial mediation, saving our clients time, money and emotional energy.
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Life Insurance: Can You Contest A Beneficiary Designation
Just recently I switched auto insurance providers.
In the process of making the switch, I was exploring some of the different life insurance options considering my old auto insurance provider was also my life insurance provider.
As I did my research and spoke with different agents I learned quite a bit about life insurance, LIRP’s , and that is when I came across a unique question.
Someone in a personal finance group asked about changing life insurance beneficiaries.
The question was simple:
Can someone change or contest the beneficiary designation? The simple answer is yes.
If you think that you should be a life insurance beneficiary, and you are not, you can contest the designation and there are multiple grounds for doing so.
This article will explain those grounds.
What Should I Do If I Am Involved In A Beneficiary Contest
If you find yourself in the middle of a beneficiary contest, you need to have an experienced life insurance attorney on your side. Our beneficiary contest lawyers will listen to you carefully, evaluate your case, outline possible venues of handling the dispute, and design a legal strategy that will work to protect your rights. Learn more about your rights as beneficiary of a life insurance policy.
Not only do we have the experience needed to negotiate complex beneficiary disputes, but we also work hard at protecting your rights and making sure you are satisfied with the outcome. In addition, we will act on your behalf so you do not have to involve yourself in a stressful dispute.
We will keep you informed of any developments of your case.
Heres how our attorneys have won cases involving beneficiary contests:
- Denied claims due to beneficiary dispute in a murder-suicide case
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What With The Insurance Company Do With Life Insurance Beneficiary Disputes
When a individual holding a life insurance policy dies the beneficiary has to submit a claim to the insurance company. They are going to have to prove that they are the beneficiary named on the claim. The insurance companies are very intent on making sure that the proper beneficiary is paid out. If another individual also puts in a claim on this life insurance policy then there is a beneficiary dispute. In the majority of cases the insurance company will take interpleader action to deal with this. Meaning that they will put it in to the hands of the courts to decide who the true beneficiary is.
Individuals who feel that they have a valid case for a beneficiary dispute should take the immediate steps necessary to have this determined. It is their responsibility to prove their concerns. If there is no dispute made with the insurance company then the insurance company has no recourse but to pay out to the beneficiary as listed on the policy.
What Happens To Life Insurance With No Beneficiary
Generally, if there is no life insurance beneficiary, the death benefit is paid out to the estate of the deceased. If the deceased person had a will or an estate plan specifying who should inherit estate assets, then the life insurance will go to that person. If there is no will or estate plan, intestacy laws determine where assets will go. These are state laws aimed at distributing money and property among close family members if the deceased hasn’t provided instructions on what to do with it.
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You Put Your Loved Ones At Risk If You Lie On Your Life Insurance Application
Dont lie or withhold information to get lower rates and then hope youll live through the contestability period, says Keith Friedman, principal of FBO Strategies, an estate and insurance firm in Stamford, CT.
My advice is to be honest and dont make it difficult for your family, he says.
If you lie and then die during the contestability period, your loved ones could be left without a death benefit payout if the life insurance company figures out that you lied.
Life Insurance Death Benefits: What You Need To Know
There are a lot of different kinds of life insurance: A policy can be temporary, or last a lifetime. It can have a cash value component or not. But the one defining feature shared by all life insurance policies is a death benefit. Its the primary reason to get life insurance, and how policies are almost always described: when someone says they have a $100,000 policy, it really means they have $100,000 worth of death benefit insurance. This article will tell you more about:
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When Beneficiaries Might Be Contested
Beneficiaries are frequently contested when you fail to update the beneficiary information on your life insurance policy after major life eventsalways consider the impact that events like marriage, divorce, and having or adopting children may have on your named beneficiaries.
Beneficiaries are more likely to be contested when you don’t submit a beneficiary change request in a timely manner. Some of the most common scenarios include the following:
- You remarry: One of the most common scenarios in which a beneficiary gets contested is when someone divorces and remarries. If they dont update the beneficiary from their former spouse to their current one, the current spouse may contest it.
- Someone argues you did not have the mental capacity to change beneficiaries: This is more likely to happen if you make changes during your later years, especially if you experience dementia or any illness that could affect your mental state, and if the change wasnt properly witnessed.
- Someone argues you were pressured to change beneficiaries: As you age, theres an increased chance you may be coerced into making beneficiary changes. For example, if you change your beneficiary from your son to your brother three days before you pass away with Alzheimer’s, your son may contest that decision, even if it’s what you truly wanted.
How You Can Prevent Life Insurance Disputes And Interpleader Action
If you face denial of life insurance benefits after the death of a loved one, speak with a trustworthy life insurance attorney with experience in this field. Your counsel may successfully avoid litigation and convince the insurance company and competing parties to agree with your claim. Avoiding interpleader actions can save time and money for all parties involved but demands retaining an experienced life insurance lawyer that can protect your interests and help you navigate the complexities of the legal process if you must go to court.
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Should I Hire An Attorney If I Have Issues With A Contested Life Insurance Policy
Many families have been faced with an insurance company contesting or entirely refusing to pay benefits from their loved ones life insurance policy.
If you are being denied payment of benefits as a named beneficiary for your loved ones life insurance policy, or you believe that an insurance company is wrongfully denying your claim, you should absolutely seek out a well qualified and experienced insurance law attorney.
Can You Change Beneficiaries
In most cases, you may change the beneficiaries named on a life insurance policy or other financial account at any time.
Changing beneficiaries is usually easy to do the challenge is often in remembering to do it. Contact your employer, financial professional or financial services company to learn how.
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My Insurer Contested My Life Insurance Claim What Must I Do
Generally, beneficiaries can get the policyholders life insurance benefits or claims within a few weeks following the demise of the insured.
However, this is not always the case as insurance companies end up using delay tactics, question your claims, and even delay them. There are many reasons an insurance company can refuse your claims.
Theyll throw around a couple of life insurance policies or even pressurize you.
Wills Trusts Or Other Evidence
One issue that comes up often is can beneficiary designation be rescinded through a will, trust, or other document. Most often, you need to comply with the insurance companys requirements to change a beneficiary for it to be effective. It is important to understand these requirements because a attempted beneficiary change may not be effective.
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Social Security Benefits: One
The Social Security death benefit is relatively easy for surviving family members to claim and quick to be paid, but it is currently a small lump-sum payment of $255 . The surviving spouse or dependent children can claim this benefit. This payment is in addition to ongoing survivors benefits to which the spouse or children may be entitled.
Go to the local Social Security office to claim benefits. The staff can help with the paperwork and explain what information and documents — a certified copy of the death certificate, for example — are needed. To find the closest office, check the government listings in the phone book, use the “How to Find Your Local Office” service at www.ssa.gov, or call the SSA, toll-free, at 800-772-1213.
Why It Happens And What It Means
Life insurance policies can provide your loved ones much-needed money when you pass away. But if you dont plan well, there may be disputes over who gets it. Making last-minute changes to your beneficiaries, or failing to update them when you should, can increase the risk of conflict.
Heres what you should know about contesting a life insurance beneficiary, including what it means, why it happens, and how to avoid it.
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