A policyowner has the power to change beneficiaries on a life insurance policy at any time and without the existing beneficiary’s consent (unless the existing beneficiary is irrevocable).
For many beneficiaries, it means that they may not even know that they are no longer on the policy and will not receive life insurance proceeds after the insured’s death.
This may come as a surprise to many family members who rely on the proceeds from a life insurance policy to honor various financial obligations after the insured’s death.
Although insurance companies verify beneficiary changes before they become effective, beneficiary changes often raise suspicions.
One of such examples is a last-minute beneficiary change when the insured is gravely ill, in the hospital or nursing home or of diminished mental capacity.
Last-minute beneficiary changes usually occur a day or two before the insured’s death. Usually, a caretaker or a person who has access to the insured’s life insurance information contacts the insurance company that holds the policy and asks for change-of-beneficiary forms. Then they assist the insured in signing the forms and send them to the insurance company.
Last-minute beneficiary changes may or may not be valid.
It is valid if it is executed by the insured who has the mental capacity to understand the nature of the documents and the consequences of beneficiary change and if it is performed out of free will without undue influence or duress. In addition, many life insurance companies have several requirements in regard to beneficiary changes.
For example, some companies require that two witnesses be present at the time a change-of-beneficiary form is signed. Other companies require that the completed form arrive at the insurance company’s office before the insured’s death. To be valid, a change of beneficiary must comply with the policy provisions.
If a last-minute beneficiary change occurred, the old beneficiary and the new beneficiary will most likely submit competing claims for the same life insurance benefits.
The insurance company will review all the documents and check if the change was made in compliance with the policy provisions. If the change is in compliance with the insurance company’s rules for changing the beneficiary, the insurer may pay the claim to the new beneficiary.
The prior beneficiary may contest a last-minute change by presenting evidence of mental and physical incapacity, undue influence, duress or fraud. Contesting beneficiaries is a complex process and may result in lengthy litigation that requires not only legal expertise and resources, but also patience from both parties.
Contesting a beneficiary change, however, is often the right way of handling a life insurance claim denial if fraud or duress is involved. Many people who contest beneficiaries based on mental incapacity or duress do so because they believe that the insured’s wishes should be carried out.
Any beneficiary contest is a complicated legal process and requires the assistance of a qualified life insurance beneficiary contest attorney. If you have questions about a life insurance beneficiary contest, call our life insurance beneficiary contest lawyers for a free initial consultation.
Call (888) 510-2212 for a free consultation.