Claims for life insurance benefits involving non-traditional families can be denied for various reasons, often tied to technicalities in policy documentation, legal definitions, and beneficiary designations.
One common reason is the failure to name the beneficiary explicitly. If the policyholder did not specifically name the non-traditional family member, such as an unmarried partner or stepchild, as a beneficiary, the insurance company will typically exclude such relationships. Ambiguity in beneficiary designation can also lead to disputes. Terms like "my family," "my children," or "my partner" may not be clear enough for insurers, who require legally identifiable designations to process claims. Additionally, life insurance policies often rely on legal definitions of relationships. For instance, an unmarried partner might not qualify as a "spouse," and stepchildren may not be recognized as "children" unless they are legally adopted. Claims may be denied if the relationship does not meet the legal or policy-defined criteria.
Policyholder misrepresentation or non-disclosure is another factor that can result in claim denial. For example, if the policyholder listed an unmarried partner as a "spouse," the claim could be denied if this misrepresentation is discovered. Furthermore, life insurance requires the beneficiary to have an "insurable interest" in the policyholder's life, meaning a financial or emotional dependency. Non-traditional relationships may face scrutiny if this interest is unclear or undocumented.
Issues can also arise during the contestability period, typically the first two years of the policy. If the policyholder dies during this period, the insurer may investigate the validity of the beneficiary designation, especially if the relationship is unconventional. Additionally, traditional family members may contest the claim, arguing that they have a stronger legal right to the benefits, which is particularly common in blended families or estranged relationships. State laws governing insurance, inheritance, or family rights may also exclude or limit benefits for non-traditional family members. Some states prioritize biological or legally recognized family members in the absence of explicit designations. Changes in circumstances not reflected in the policy can lead to issues as well. If the policyholder's relationship changed, for instance, if they divorced a spouse and later partnered with someone new, but failed to update the beneficiary designation, the original beneficiary may still have the legal right to the claim.
The life insurance lawyers at LifeInsuranceAttorney.com know how to handle life insurance disputes involving beneficiary designations.