When you purchase life insurance, you may designate a beneficiary to receive the proceeds upon your death.
You can name a single beneficiary if you choose to do so. However, it is advisable to name a primary beneficiary and then one or more “contingent” beneficiaries to receive the proceeds from your life insurance policy if the primary beneficiary dies before you (or at the same time).
It’s important to note that life insurance proceeds are not disposed of through a will. Rather, life insurance is a legally binding contract between the policy owner and the life insurance company. The contract requires the insurance company to pay the proceeds to the named or default beneficiary upon the policy owner’s death, and, absent a court order to do otherwise, it must follow the terms of the contract regardless of what the policy owner’s will says.
What Do You Need to Prove Who is Entitled to Life Insurance Proceeds?
The insurance company will not automatically pay life insurance proceeds when the policy owner dies. Instead, the beneficiary must file a claim to receive the insurance proceeds. The exact process and requirements will vary between insurers. For instance, some insurance companies allow claims to be submitted online, while others require a written claim to be sent by U.S. mail.
The evidence that you need to prove you are entitled to life insurance proceeds will depend on the terms of the life insurance policy. However, most policies require you to submit a claim form, a copy of the policy, and a certified copy of the death certificate. If the death occurred outside the United States, trust worthy or reliable proof of death may be required.
How Do You Contest a Life Insurance Policy Payout?
If you believe that life insurance policy proceeds should not go to the named beneficiary, you cannot challenge the payout with the insurance company. Since the insurance company is required to honor the terms of the contract, you will need to contest a life insurance policy payout in court.
However, you can’t contest a life insurance policy payout simply because you don’t like who was named as the beneficiary. Instead, you need a legally recognized reason to challenge the designation.
Some common situations where life insurance beneficiaries are contested include:
- The insured never updated their life insurance policy’s beneficiary after a divorce, and a former spouse is named as the beneficiary.
- The insured attempted to change their beneficiary but could not complete the act.
- The insured lacked the mental capacity to name a beneficiary.
- The designation was made due to fraud, undue influence, or coercion.
- The destination conflicts with community property laws, a court order, or a divorce decree.
- The designation form was improperly executed.
- The beneficiary is disqualified because they caused the insured’s death.
Where Can You File a Life Insurance Lawsuit?
If you want to contest a beneficiary designation, you can file a life insurance lawsuit in the probate court handling the policy owner’s estate. If a probate case has not yet been opened, you may be able to initiate a case yourself in federal or state court depending on jurisdictional facts.
Beneficiary designation contests are challenging to win and legally complex, so it’s vital that you consult with an experienced probate litigation attorney before taking any action. A knowledgeable lawyer can make recommendations as to whether you have legal grounds to challenge a life insurance payout and what the most effective course of action to address your concerns might be.
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