When a federal employee takes out life insurance coverage on his life, he may designate anyone to be the beneficiary on his policy. If he designates his spouse as the sole, primary beneficiary on the policy, the spouse will collect the FEGLI benefits after his death. That is true even in situations where the insured Federal employee divorced his spouse but did not update the beneficiary designation on file.
While many state laws revoke an ex-spouse as the beneficiary on a former spouse’s life insurance policy, FEGLI laws do not. FEGLI laws require the insurance company to pay FEGLI benefits to the beneficiary on the file without considering the couple’s legal separation or divorce. Additionally, if a couple divorced in a state where the law automatically revokes an ex-spouse as the beneficiary on a former spouse’s life insurance policy, the ex-spouse’s state law claim will not survive. FEGLI claims are governed by federal laws which will trump any conflicting state laws and state law claims.
The United States Supreme Court held in Hillman v. Maretta that the Federal Employees’ Group Life Insurance Act (FEGLIA) preempts any conflicting state law. Federal law under the Federal Employees’ Group Life Insurance Act dictates that death benefits from FEGLI policies shall go to the designated beneficiary, regardless of state regulations to the contrary. The Supreme Court opined that one of the purposes of FEGLIA (The Federal Employees Group Life Insurance Act) is to implement the expressed wishes of the insured. Since state laws that automatically revoke an ex-spouse as the beneficiary on a former spouse’s life insurance policy have the effect of overriding an insured’s choice of beneficiary, FEGLIA preempts them.
Who Gets FEGLI Benefits After the Insured Federal Employee’s Death?
After the insured Federal employee’s death, the Office of Federal Employees’ Group Life Insurance (OFEGLI) will pay life insurance benefits in a particular order, set by law. Thus, if the federal employee assigned ownership of his life insurance by filing an Assignment, Federal Employees’ Group Life Insurance form, OFEGLI will pay benefits to the beneficiaries designated by the insured’s assignee and if there are no such beneficiaries, the FEGLI benefits will be paid to the insured’s assignees.
b. Court Order
If there is a valid court order on file, after the insured Federal employee’s death, the Office of Federal Employees’ Group Life Insurance (OFEGLI) will pay life insurance benefits in accordance with that court order. However, if the court order is not valid, the benefits will be paid to the beneficiary the insured designated. It means that if the divorce court order presented to the OFEGLI does not meet the requirements for a valid court order, the FEGLI benefits will not be paid in accordance with such order and will be distributed to the beneficiary designated by the insured Federal employee. To determine whether your court order is a valid court order under the FEGLI standards, you will need to consult with a FGELI attorney.
c. No Beneficiary Designation
If there is no beneficiary designated on file, the FEGLI benefits will be paid to the widow or widower. In case there is no widow/widower, the benefits will be paid to the Federal employee’s children and if there are no children – to the insured’s parents. If there are no parents, then OFEGLI will pay the benefits to the executor of the estate (if there is an estate) or to the Federal employee’s other next of kin.
The laws governing FEGLI claims are very complex and may be confusing. In order to understand your rights, you should consult with a FEGLI attorney prior to filing a claim. A FEGLI attorney will guide you through the process of filing a FEGLI claim and will assist you during the review period. If you, or someone you know has issues with a denied FEGLI claim, call us at 888-510-2212.
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