Can a Life Insurance Beneficiary Be Changed After Death?

This article provides general information about life insurance beneficiary changes and shouldn't be considered legal advice. Life insurance laws vary by state, and individual circumstances may affect your rights. Consult with a qualified attorney or insurance professional for guidance specific to your situation

A life insurance policy is a binding contract that specifies who'll receive the death benefit. In some instances, another party can contest the beneficiary designation upon the policyholder's death.

A contestation is a legal challenge to the beneficiary on a life insurance policy. It arises when someone believes they were unjustly excluded or suspects fraud or manipulation.Changing a beneficiary on life insurance can occur after death through contestation due to the following reasons:

• Policy Terms and Conditions: If the policy explicitly allows changing the beneficiary on life insurance after the policyholder's death, the update can proceed.
• Beneficiary Disclaimer: If a beneficiary disclaims the benefits, the insurance company will distribute them to the contingent beneficiaries of the life insurance (secondary beneficiaries) or the policyholder's estate.
• Invalid Beneficiary Designation: A court may rule to change the life insurance beneficiary if the initial beneficiary lacks legal validity.
• Court Orders: In divorce or child support obligations, a court might order a change in the beneficiary of a life insurance policy.
• Suspected Fraud or Undue Influence: A court might allow a change of life insurance beneficiary if someone manipulated or coerced the policyholder into naming a specific beneficiary.
• Minor Beneficiary: If the beneficiary is a minor, the estate can appoint a legal guardian to manage the proceeds until the child reaches legal age.

Each case is subject to different state laws and specific life insurance rules about beneficiaries, so it's best to consult a legal professional or insurance expert to understand your situation.

The ability to contest beneficiary designations and the grounds for doing so vary by state. Some states have shorter limitation periods or different standing requirements than others.

Anyone considering contesting a life insurance beneficiary benefits from consulting a lawyer specializing in life insurance claims. Legal professionals can offer clarity on beneficiary rules and the specifics of contesting beneficiary designations, ensuring adequate representation of your rights and interests.

All U.S. states apply a version of the slayer rule, either through statute or established common law, which bars a beneficiary from receiving life insurance proceeds if they intentionally caused the insured’s death. The rule focuses on intentional and wrongful conduct rather than accidental or negligent acts.

A criminal conviction isn’t required in every case. Civil courts may apply the slayer rule using a preponderance of the evidence standard, which is lower than the beyond a reasonable doubt standard used in criminal proceedings. Whether a civil court can make this determination without a criminal conviction depends on state law.

When the slayer rule applies, the disqualified beneficiary is treated as if they predeceased the insured. As a result, the death benefit typically passes to the contingent beneficiary, if one is named, or to the insured’s estate if no contingent beneficiary exists, regardless of the original beneficiary designation.

A contest can trigger a beneficiary change. This involves a legal process, potentially leading to a court-ordered beneficiary adjustment.

1. Identifying Grounds for Contest: The person who wishes to contest the life insurance beneficiary designation first determines if there are legitimate reasons for the contest. Grounds for contesting include suspected fraud, coercion or an invalid designation, such as when the beneficiary of a life insurance policy is deceased or legally incapable.

2. Filing a Lawsuit: The contesting party files a lawsuit against the insurance company and possibly against the named beneficiary of a life insurance policy. The lawsuit should present arguments and evidence supporting their claim.

3. Court Evaluation: The court evaluates the evidence and arguments. If the court finds the contest valid, it can order the insurance company to pay the death benefits to a different beneficiary. This can lead to a change in life insurance beneficiary, potentially directing the proceeds to a contingent life insurance beneficiary if one is designated.

   Appointment of the estate as the beneficiary of life insurance can also occur if there's no valid contingent beneficiary or the court deems it appropriate.

4. Implementing the Court Order: The insurance company then must follow the court's order to pay the death benefits to the new beneficiary designated by the court. For example, if a minor life insurance beneficiary is involved, the court designates a guardian to manage the funds until the beneficiary reaches adulthood.

A beneficiary designation can't be changed or corrected once the insured passes away. The designation of a beneficiary is legally binding, and the insurance company pays out the death benefit according to the policyholder's latest valid designation.

Sometimes, a life insurance beneficiary dispute may arise if someone challenges the named beneficiary in a life insurance policy. A dispute could be due to suspicion of fraud, belief of being unjustly excluded or perceived errors in the policy. In such cases, the party seeking to contest the life insurance beneficiary must prove their claim in court.