If you have a life insurance plan, you’ve likely named beneficiaries who will receive the death benefit once you pass away. But you should also know that it’s possible for a beneficiary to be contested. Let’s take a closer look at how beneficiaries work and a few situations in which your life insurance beneficiary might be contested.
How life insurance beneficiaries work
A life insurance beneficiary is a person or entity that will collect the death benefit from your life insurance plan if you pass away while it’s still active. You can choose a beneficiary, which may be your spouse, adult child, or even a charity. Once you do, you’ll need to name them on a life insurance beneficiary form, which your insurer will use to determine who is eligible for the death benefit upon your death. The primary beneficiary is first in line to get the death benefit, and the contingent beneficiary acts as a backup if the primary beneficiary has passed away.1
Can a life insurance beneficiary be changed after the policyholder’s death?
After you pass away, your life insurance beneficiary can’t be changed. The proceeds will go to the primary beneficiary you named, or the contingent beneficiary if the primary is deceased. This way, the policy will honor your exact wishes while you were alive. No other individual or entity has the right to collect your life insurance death benefit upon your passing.2
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Can you dispute a life insurance beneficiary?
It’s possible to dispute or contest a life insurance policy. However, doing so requires a legal court process. Since the process is quite complex, you should hire an experienced attorney to help you out. If you have a valid case and strong legal support, you may be able to prove that the beneficiary listed on the policy doesn’t accurately reflect the policyholder’s wishes when they passed away. Note that regardless of the outcome, the life insurance company will distribute the funds based on the court’s orders.3
When might a life insurance beneficiary be contested?
There are several situations where a life insurance beneficiary can be contested, such as:3
The policyholder changed the beneficiary right before their passing
In some cases, the policyholder may try to change their life insurance beneficiary before they die but are unable to so successfully. This may be because they didn't follow their insurer’s process correctly or comply with the provisions outlined in their policy.
The policyholder remarried
A policyholder may get divorced and remarried. If they don’t update the beneficiary from their former spouse to their current one, it might make sense for the current spouse to contest it.
Other legal reasons
There are several other legal reasons why a life insurance beneficiary might be contested. Maybe the policyholder didn’t have the mental capacity to change beneficiaries but was pressured to do so. Or perhaps the change was wrongfully made by someone other than the policyholder.
What happens when a beneficiary is contested?
When someone contests a beneficiary, they usually hire an attorney. They also contact the life insurer before it pays out the death benefit, typically a few weeks after the policyholder’s passing. Once a life insurance company receives a notice of contest, they’ll wait for everything to be settled out of court. In the event this doesn’t happen, the dispute process will begin in court.4
How to avoid life insurance disputes
As a policyholder, there are several ways you can prevent life insurance disputes, including:3
Update beneficiaries as needed
If you go through major life events, like divorce, for example, it’s important to update your life insurance beneficiary accordingly. Don’t wait too long, or you may forget.
Follow insurance company procedures when making beneficiary changes
Each life insurance company has their own procedures for how to change a beneficiary. Make sure you understand what your insurer requires and follow it to a tee.
Discuss any changes with your loved ones
Be open with loved ones about your beneficiary decisions. They should know about your wishes and any changes you make.
Learn more about life insurance
If you invest in life insurance, it’s your job to name beneficiaries that may receive the death benefit upon your passing. By updating your beneficiaries as needed, following your insurer’s procedures for making changes, and discussing changes with your loved ones, you can avoid costly and time-consuming disputes.
Aflac offers term and whole life insurance policies to help protect your family financially if you unexpectedly pass away. Be sure to explore all types of plans so you can choose an option that fits your budget and needs. Chat with an Aflac agent today for a quote or more information.
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Disclaimer
1 ValuePenguin – How to Choose a Life Insurance Beneficiary & How Claims Work. Updated October 26, 2022. https://www.valuepenguin.com/life-insurance/life-insurance-beneficiary. Accessed May 22, 2023.
2 Policygenius – Can You Change Your Life Insurance Beneficiary? Updated June 20, 2022. https://www.policygenius.com/life-insurance/can-you-change-your-life-insurance-beneficiary/. Accessed May 22, 2023.
3 The Balance – Contesting a Life Insurance Beneficiary. Updated July 30, 2022. https://www.thebalancemoney.com/contesting-a-life-insurance-beneficiary-5205108. Accessed May 22, 2023.
4 SmartAsset – Contesting Life Insurance Beneficiary – A Guide. Accessed May 20, 2021. https://smartasset.com/estate-planning/contesting-life-insurance-beneficiary. Accessed May 22, 2023.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac Coverage
Life (A68000 Series) - In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. Term and Whole Life (B60000 Series) - In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Group Whole Life (Q60000 Series) - In Arkansas, Delaware & Oregon, Policy Q60100M. In Idaho Policy Q60100MID. In Oklahoma, Policy Q60100MOK. In Texas, Policy Q60100MTX. Group Term Life (Q60000 Series) - In Delaware, Policies Q60200M. In Arkansas, Idaho, Oklahoma, Oregon & Texas, Policies ICC18Q60200M, ICC18Q60300C, ICC18Q60400C.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage is underwritten by American Family Life Assurance Company of New York.
Tier One Coverage
Life (Final Expense Life) - In Arkansas, Delaware, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies ICC21-AFLLBL21 and ICC21-AFLRPL21; and Riders ICC21-AFLABR22, ICC21-AFLADB22, and ICC21-AFLCDR22.
Tier One coverage is underwritten by Tier One Insurance Company.
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions.
Aflac’s family of insurers include Aflac, Aflac New York, Continental American Insurance Company, and Tier One Insurance Company.
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