Beneficiary Disputes Life Insurance

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2025 Life Insurance Beneficiary Disputes

  • Boston Mutual contest a life insurance beneficiary $106,000.00
  • American Equity interpleader lawsuit settled $125,000.00
  • South Farm Bureau illegal beneficiary change $52,000.00
  • Country Financial interpleader action resolved $98,000.00
  • Aegon divorce decree vs life insurance beneficiary $77,000.00
  • Great West Life spouse trying to override a beneficiary $25,000.00
  • Landmark Life illegal beneficiary change we won $56,000.00
  • AVMA life insurance paid to wrong person fixed by us $84,000.00
  • Puritan life insurance beneficiary sibling issue $102,000.00
  • Great Southern change beneficiary on life insurance after death $75,000.00
  • All American contested life insurance policy resolved $40,000.00

Life Insurance Beneficiary Disputes: Common Reasons and How Interpleaders Can Help

When it comes to life insurance, most people view it as a means of securing their loved ones financially after their passing. It provides peace of mind, knowing that, in the event of their death, family members or beneficiaries will receive the funds needed to handle any immediate expenses or future financial needs. However, the process of distributing those benefits is not always straightforward. Beneficiary disputes can arise for a variety of reasons, complicating the situation and often leading to significant legal battles. These disputes can create tension among family members and beneficiaries, leaving them at odds over who is entitled to the proceeds from the life insurance policy. Sometimes, the issue can escalate to the point where the insurance company, as a neutral third party, is forced to involve the courts, seeking resolution through a legal procedure called an interpleader.

Why Do Life Insurance Beneficiary Disputes Happen?

Beneficiary disputes often stem from outdated policies, family conflicts, or legal complexities that arise after the policyholder's passing. Some of the most common reasons include:

1. Failure to Designate a Beneficiary

One of the most frequent causes of disputes occurs when the policyholder has failed to name a beneficiary. In such cases, the policy proceeds may default to the insured’s estate, leading to potential probate litigation and confusion among heirs.

2. Multiple Beneficiaries with Complicated Designations

If a policyholder lists multiple beneficiaries without clear payout percentages, disputes can arise. Siblings, spouses, and children may argue over the division of funds, creating legal battles that only the courts can settle.

3. Revocation-on-Divorce Laws

In states with revocation-on-divorce statutes, an ex-spouse may be automatically removed as a beneficiary. However, conflicts can still arise when an ex-spouse believes they were meant to remain a beneficiary despite the law.

4. Community Property Claims

In community property states, a surviving spouse may be entitled to a portion of the policy, even if the named beneficiary is someone else. This can lead to interpleader lawsuits filed by insurance companies.

5. Fraud or Undue Influence

If a beneficiary change was made under duress or fraudulent circumstances, it can be challenged. Family members may contest a last-minute change made when the policyholder was in poor health or under outside pressure.

The Role of Interpleader Lawsuits

Interpleader lawsuits serve as a legal mechanism that allows an insurance company to resolve disputes by handing over the policy proceeds to a court, which then decides who should receive the payout. This process ensures fairness and protects the insurer from potential liability.

When multiple parties claim the same life insurance proceeds, an interpleader action can prevent improper payments and allow the courts to investigate and determine rightful ownership. This is particularly important when there are competing claims between current spouses and ex-spouses, children from different marriages, or allegations of fraud.

What to Do If You Are Involved in a Life Insurance Dispute

If you are facing a dispute over life insurance benefits, it is crucial to seek legal representation as soon as possible. Having an experienced attorney on your side can make a significant difference in protecting your rights and ensuring that you receive the benefits to which you are entitled. Our law firm has a proven track record in handling life insurance beneficiary disputes and interpleader cases, securing favorable outcomes for clients nationwide.

Some key steps to take if you are involved in a beneficiary dispute include:

  • Gathering Documentation: Collect all relevant documents, including the insurance policy, beneficiary designations, and any written communications regarding changes to the policy.

  • Understanding Your Legal Rights: Different states have different laws regarding beneficiary disputes, so consulting an attorney can help clarify your options.

  • Considering Mediation: In some cases, disputes can be resolved through mediation rather than going to court, which may save time and legal expenses.

  • Filing a Lawsuit If Necessary: If mediation fails, taking legal action through an interpleader lawsuit or direct litigation may be required to ensure your rights are upheld.

Conclusion: Why Proper Planning Matters

Life insurance is a critical financial tool, but its benefits can be compromised if proper planning is not undertaken. Regularly reviewing and updating beneficiary designations, especially after significant life changes like marriage, divorce, or childbirth, can help prevent disputes. If conflicts do arise, knowing your rights and seeking professional legal assistance is key to achieving a fair resolution.

Our law firm specializes in resolving complex life insurance disputes, and we are committed to helping clients navigate these legal challenges with confidence. Whether you are dealing with an outdated beneficiary designation, a fraudulent claim, or a competing family interest, our attorneys are here to fight for the outcome you deserve.

Cases

Case 1: Resolving a Beneficiary Dispute Over a Divorced Spouse

Mr. Abrams, a federal employee, passed away unexpectedly, leaving behind two potential beneficiaries: his ex-wife, Ms. Waverly, and his current partner, Ms. Delaney. The insurance company initially paid the death benefit to Ms. Waverly, the ex-wife, citing the beneficiary designation on file. However, Ms. Delaney disputed this decision, asserting that Mr. Abrams had changed the beneficiary designation after his divorce and had named her as the new primary beneficiary.

Ms. Delaney was devastated by the insurer’s decision, as she was certain that her partner had updated his beneficiary information before his passing. The insurer, however, stated that they had not received any updated beneficiary forms, and they had only on record the beneficiary designation made during Mr. Abrams’ marriage to Ms. Waverly.

We immediately began investigating the situation, gathering records, and interviewing witnesses who were familiar with Mr. Abrams' intentions. Upon review, we discovered that Mr. Abrams had indeed submitted a new beneficiary designation form after his divorce, but it had been misplaced by the insurer due to a clerical error. We presented affidavits from colleagues and friends who confirmed that Mr. Abrams had told them about the change in his beneficiary designation and had intended for Ms. Delaney to receive the benefits.

We filed an appeal, providing all the necessary documentation, including the new beneficiary form and statements from witnesses who corroborated Ms. Delaney's claims. After reviewing the evidence, the insurer reversed their decision and paid the death benefit to Ms. Delaney, acknowledging their administrative error. This case highlights the importance of properly updating beneficiary designations and the need for policyholders to confirm that their changes are accurately recorded.

Case 2: Contesting a Beneficiary Dispute After Alleged Forged Signature

Ms. Brixton, the daughter of Mr. Walton, was shocked when the life insurance company informed her that the death benefit would be paid to a new beneficiary—her uncle, Mr. Dorian—rather than her. The insurer claimed that Mr. Walton had updated his beneficiary designation to list Mr. Dorian as the primary beneficiary just months before his death. Ms. Brixton, however, believed that her father had never made such a change, and she suspected that the signature on the form was forged.

Ms. Brixton reached out to us, determined to fight for the benefits she believed were rightfully hers. Upon examining the insurer’s records, we noticed that the signature on the beneficiary change form appeared inconsistent with Mr. Walton’s usual signature. We suspected fraud, as the timing of the change was suspicious, and Mr. Walton had always referred to his daughter as his primary beneficiary.

We conducted an investigation and hired a handwriting expert to analyze the signature on the beneficiary form. The expert concluded that the signature on the form was indeed forged. Additionally, we uncovered that Mr. Dorian had access to Mr. Walton’s personal documents and may have had an opportunity to submit the fraudulent form.

We filed an appeal and presented the expert’s findings, alongside statements from family members and friends who confirmed that Mr. Walton had intended for his daughter, Ms. Brixton, to be his beneficiary. The insurer accepted the evidence and reversed the decision, paying the death benefit to Ms. Brixton. This case emphasizes the importance of vigilance in reviewing beneficiary designations and the legal avenues available when fraud is suspected.

Case 3: Overturning a Beneficiary Dispute After an Unwitnessed Change in Beneficiary

Mr. Garrett had been a long-time policyholder of a life insurance policy through his employer. After his sudden passing, the insurance company informed his family that the beneficiary on file was an acquaintance, Mr. Finley, who had been listed as the beneficiary for several years. However, Mr. Garrett’s widow, Mrs. Garrett, argued that her husband had intended for her to be the beneficiary and that the change in beneficiary designation was made under questionable circumstances.

Mrs. Garrett explained that she was certain that Mr. Garrett had verbally confirmed her as the primary beneficiary shortly before his death, but the change had not been officially witnessed or documented by a third party. She was left to navigate a difficult situation where the insurer only had a single, unverified document listing Mr. Finley as the beneficiary.

We took action by gathering evidence that supported Mrs. Garrett’s claims. We interviewed close family members and friends who recalled Mr. Garrett speaking about his wife as the intended beneficiary and who confirmed that they had witnessed the couple’s discussions on the matter. Additionally, we identified that the beneficiary change form had not been properly witnessed or signed in accordance with the insurer's protocols.

We filed an appeal with the insurer, presenting affidavits and statements from witnesses that backed up Mrs. Garrett’s version of events. After reviewing the case, the insurer decided to disregard the unverified beneficiary change form and instead honored the widow’s claim, awarding the death benefit to Mrs. Garrett. This case underscores the importance of having proper witnesses when making beneficiary changes to ensure that future disputes are avoided.

Case 4: Fighting a Beneficiary Dispute After a Common Law Spouse Was Excluded

Ms. Florence, who had lived with her partner, Mr. Montgomery, for over 10 years, filed a claim for the life insurance benefits after his sudden death. Mr. Montgomery had never legally married Ms. Florence, but they had been living together as a couple and had often discussed the fact that she would be the beneficiary of his life insurance policy. However, the insurance company denied her claim, citing the legal requirement for the beneficiary to be a spouse or a designated dependent.

Ms. Florence was heartbroken, as she knew that Mr. Montgomery had always considered her his partner, even though they had never formally married. The insurer, however, maintained that only a legally recognized spouse or dependent could be the beneficiary, and since the two had never married, the insurance company would not pay out the claim to Ms. Florence.

After consulting with Ms. Florence, we gathered evidence that Mr. Montgomery had intended for her to be his beneficiary, including their joint financial accounts, shared tax filings, and witnesses who could testify to their long-term partnership. Additionally, we reviewed the policy’s language, which allowed for the designation of a common-law spouse as a beneficiary, provided there was clear evidence of the relationship.

We filed a legal claim, demonstrating that the insurer had not taken into account the full extent of their own policy language. The insurer, after reviewing the case and the supporting evidence, reversed their decision and agreed to pay the death benefit to Ms. Florence. This case highlights the importance of considering long-term partnerships and common-law marriages in life insurance claims, especially when the deceased intended for their partner to be the beneficiary.

Written by: Attorney Christian Lassen, founder of Lassen Law Firm, a national leader in handling life insurance claims, having secured hundreds of millions in settlements for clients nationwide. With 24 years of experience, Mr. Lassen specializes in resolving delayed and denied life insurance claims. He is a certified life member of the Million Dollar Advocates Forum and Multi-Million Dollar Advocates Forum, recognition given only to attorneys who have won million- and multi-million-dollar verdicts and settlements. A top 1% lawyer in the U.S., Mr. Lassen is dedicated to both his clients and community, supporting various charities, especially those focused on children with cancer.

Sources

The NAIC outlines that insurers must follow state laws in determining beneficiary rights and resolving disputes. According to the Insurance Information Institute, common causes include missing or outdated beneficiary designations, or when the insured fails to clearly identify a beneficiary.