The question of whether a divorce decree can be considered in an SGLI beneficiary dispute is quite common.

When people get divorced, their life insurance policy is usually incorporated into their divorce decree obligating one or both spouses to maintain their life insurance policy for the benefit of the other spouse and children.

In many cases, a divorce decree obligating a divorcing individual to carry a life insurance policy for the benefit of the former spouse and children will have an effect on how proceeds from a life insurance policy are distributed after an insured’s death. Thus is not the case, however, with SGLI policies.

SGLI polices are different from private individual life insurance policies in that SGLI is controlled by federal, rather than state, law. Under the U.S. Constitution, Federal laws preempt state laws.

What it means to a divorced individual and a possible recipient of SGLI benefits is that if a state divorce decree is in conflict with the beneficiary designation on an SGLI policy, the beneficiary designation on the SGLI policy will prevail and the state divorce decree will not be considered in determining who should receive the SGLI payout.

If a former wife has a divorce decree that obligates her ex-husband to maintain his SGLI policy for her benefit she may receive the benefits if the ex-husband complied with the divorce decree and named her the beneficiary on his SGLI policy. If he did not name her the beneficiary on his SGLI policy, she will not be able to get the SGLI payout under the law. However, it does not mean that there is no recourse at all.

In some states, individuals who have an alimony claim under a state divorce decree may establish a trust or other legal right to continue to receive alimony from the assets of the insured’s estate.

Although the law controlling SGLI precludes a state court from imposing a trust or other right to the proceeds of an SGLI insurance policy, it does not prevent an establishment of a constructive trust or other right with respect to other assets based upon equitable principles.

A constructive trust is not a traditional trust. It is a legal entity that is designed as a remedy for individuals who have an unjust enrichment claim. In constructive trusts, there is no trustee and it operates by ordering the person who would otherwise be unjustly enriched to transfer the disputed property to the rightful recipient.

In order to create a constructive trust, there must be a court order. The requirements for obtaining a court order imposing a constructive trust will depend on the state in which the remedy is sought.

If the insurance company denied your SGLI claim, call our SGLI attorneys for a free consultation. You may feel that there is nothing that can be done to recover a denied SGLI claim, but you may have a valid claim.

Only an experienced SGLI attorney can help you understand your rights and options. Our SGLI lawyers are legal experts in the area of SGLI and have helped many servicemembers’ families recover SGLI proceeds to which they are entitled under the law.


Call (888) 510-2212 for a free consultation.