Life insurance claims are often denied because of issues related to beneficiary changes. These disputes typically arise when the designated beneficiaries listed on the policy are outdated, disputed, or altered under suspicious circumstances. Whether caused by administrative oversight or alleged fraud, such issues can delay or prevent beneficiaries from receiving the death benefit. At our life insurance law firm, we’ve resolved numerous beneficiary disputes, including recent victories against The Hartford Life, TIAA Life, Oxford Life, Pru Life, USAA Life, Vantis Life, New Era Life, Globe Life, Transamerica Life, and Sagicor Life.
Failure to Update Beneficiary Designations
One of the most common reasons for life insurance claim denials is the failure to update the beneficiary designation after major life events. A policyholder may intend to change beneficiaries after a divorce, remarriage, or the birth of a child—but if the change isn’t formally completed and documented with the insurer, the original designation remains in effect. If the insured passes away with outdated information on file, insurers may withhold the death benefit until a court determines who the rightful beneficiary is.
For example, if a policyholder divorces and remarries but never updates the life insurance policy to remove the ex-spouse, the death benefit may still legally go to the ex-spouse. In such situations, family members may attempt to challenge the designation in court, alleging the policyholder intended to make a change but failed to follow through. Until the legal issue is resolved, the insurer will typically freeze the claim.
Disputes Between Multiple Beneficiaries
When a policy names multiple beneficiaries, disputes can arise over how the benefit is divided or whether all listed beneficiaries are entitled to a share. These conflicts may stem from:
Unequal distributions that seem unjust or unclear
Beneficiaries contesting each other’s eligibility
Claims of fraud, coercion, or undue influence in the creation or modification of the designation
In such cases, insurers may opt to file an interpleader action, depositing the policy proceeds into court while the parties litigate their entitlement. We frequently represent beneficiaries in these lawsuits and work to prove our client’s rightful claim to the death benefit.
Last-Minute Changes and Insurer Scrutiny
Changes made to beneficiary designations shortly before the policyholder’s death are often met with heightened scrutiny. Insurers may view these as suspicious, especially if:
The policyholder was in declining health
A new beneficiary was added under unusual circumstances
The change deviated from prior intentions or family arrangements
If there’s any suggestion that the policyholder lacked capacity or was influenced by another person, insurers may delay or deny the claim pending an investigation. They may also require medical records, witness testimony, or other supporting documents before processing the payout.
Contingent Beneficiary Confusion
Issues involving contingent beneficiaries can also cause delays or denials. These are the individuals or entities set to receive the benefit if the primary beneficiary is deceased or unable to claim the funds. Common complications include:
The contingent beneficiary is no longer alive or cannot be located
The designation is vague or missing
Multiple contingent beneficiaries claim conflicting rights to the policy
In these scenarios, insurers may require clarification through legal proceedings before releasing the funds.
Legal Challenges to Beneficiary Designations
If someone files a legal challenge to a beneficiary designation, insurers will typically withhold the death benefit until the court issues a ruling. These challenges often involve serious allegations, such as:
Forgery of the beneficiary form
Lack of mental capacity at the time of the change
Undue influence by a caregiver or family member
Violation of a divorce decree or court order requiring the insured to maintain a specific beneficiary
Such cases often involve complex legal arguments, expert witnesses, and testimony about the insured’s intent. Our firm has successfully defended and challenged beneficiary designations in courts nationwide.
We Resolve Life Insurance Beneficiary Disputes Nationwide
No matter the reason for the denial, our firm has the resources and experience to resolve life insurance beneficiary disputes—whether the policy was privately purchased, employer-sponsored, or federally regulated. We represent clients in:
Denied life insurance claims
Beneficiary challenges and interpleader lawsuits
Claims involving fraud, coercion, or incapacity
Contested group life insurance policies and ERISA claims
FAQ: Life Insurance Denials Due to Beneficiary Changes
Can a life insurance claim be denied if the beneficiary is outdated?
Yes. If the policyholder failed to update the beneficiary after a major life event (like divorce), and the designation is disputed, the insurer may delay or deny the claim until the matter is resolved legally.
What happens if two people claim to be the rightful beneficiary?
The insurer may file an interpleader lawsuit and deposit the funds into the court system. A judge will then decide who is legally entitled to the proceeds.
Can I challenge a last-minute beneficiary change?
Yes. If you believe the change was made due to fraud, coercion, or lack of capacity, you can contest it in court. Insurers often hold the benefit until a judge rules.
Is an ex-spouse automatically removed after divorce?
Not always. Some states have automatic revocation statutes, but many policies remain in effect unless formally updated. Federal policies (like FEGLI) do not follow state revocation laws.
What happens if the contingent beneficiary can't be located?
The insurer may require a court order or additional legal documentation to determine how the benefit should be distributed.
Can a verbal promise override the written beneficiary designation?
No. Beneficiary designations must be in writing and submitted to the insurer. Verbal promises generally hold no legal weight.
How long does it take to resolve a beneficiary dispute?
It depends on the complexity of the case. Some disputes settle within a few months, while others may require litigation and take longer.
Does the insurer investigate suspicious beneficiary changes?
Yes. If a change was made shortly before death or under questionable circumstances, the insurer may delay payment pending a full investigation.
Do I need an attorney to resolve a beneficiary dispute?
Absolutely. These cases often involve complex legal and factual issues. Our attorneys are experienced in beneficiary litigation and interpleader defense.