Contesting a Life Insurance Beneficiary Designation: What You Need to Know
When a loved one passes away, life insurance is supposed to provide financial security—not spark a legal battle. Yet beneficiary disputes are one of the most common reasons families contact a life insurance lawyer. A life insurance policy is a legally binding contract between the insured and the insurance company, and payouts must follow both policy terms and state or federal law.
Issues involving estate planning, divorce, child support, trusts, and wills often surface after death, and many of these issues directly affect who is entitled to collect a life insurance benefit.
While the named beneficiary is usually the person who receives the payout, that designation can be contested under certain circumstances. Whether your rights as a beneficiary are being challenged—or you believe someone else was wrongfully named—you may need a life insurance attorney to protect your claim.
If your life insurance beneficiary designation is being disputed, call (888) 510-2212 for a free case evaluation.
Can a Life Insurance Beneficiary Be Contested?
Yes. Anyone with evidence suggesting the current beneficiary is invalid may file a challenge to stop the insurance company from paying the benefits. These disputes are complex and often involve allegations such as:
Fraud or misrepresentation
Undue influence
Mental incapacity
Violations of divorce decrees
Community property rights
Improper beneficiary changes
Resolving these disputes typically requires the help of a life insurance lawyer who understands both policy language and the laws governing payment of death benefits.
At our life insurance law firm, we aim to resolve beneficiary disputes quickly, strategically, and cost-effectively—often through negotiations or alternative dispute resolution before court involvement becomes necessary.
Common Reasons a Life Insurance Beneficiary Is Contested
Beneficiary contests typically arise when someone believes the existing designation is invalid. Below are the most frequent situations where a life insurance beneficiary dispute attorney becomes necessary.
1. The Claimant Is an Ex-Spouse
Divorce is one of the top reasons beneficiary designations are challenged. Many policyholders forget to update their policies after the divorce, or they may still be required by a court order to maintain the ex-spouse as beneficiary.
Key issues include:
State laws that revoke beneficiary rights after divorce
Divorce decrees requiring the insured to maintain coverage
Situations where the ex-spouse dies before the policyholder
Policies reverting to the estate due to outdated designations
These disputes often require a life insurance attorney to analyze divorce documents, policy language, and state statutes.
2. Community Property Rights of a Surviving Spouse
In community property states, life insurance purchased with community funds is considered marital property. If the insured names someone outside the marriage without the spouse’s consent, the surviving spouse may claim:
Constructive fraud
Violation of community property laws
Improper transfer of marital assets
These issues can result in a direct challenge to the named beneficiary.
3. Forged Changes, Mental Incapacity, or Undue Influence
“Last-minute” beneficiary changes often trigger legal disputes. Many occur when the insured is:
Hospitalized
Gravely ill
Suffering cognitive decline
Under the influence of a caretaker or new partner
A life insurance dispute lawyer can challenge the change if evidence shows:
The insured lacked mental capacity
The insured was coerced or manipulated
The form was forged or fraudulently submitted
The change violated policy procedures
These disputes frequently result in competing claims from the old and new beneficiaries.
4. Improper or Invalid Beneficiary Changes
Even if the insured clearly intended to change beneficiaries, the change may be rejected when:
Required witness signatures are missing
The form arrives after the insured’s death
Policy procedures weren’t followed precisely
ERISA or federal rules apply
Courts may enforce the change if the insured “substantially complied,” but the standard varies by jurisdiction.
5. Elective Share Laws
Elective share laws give a surviving spouse the statutory right to claim a percentage of the deceased spouse’s estate—regardless of what the will says. While life insurance proceeds typically pass outside the probate estate, elective share statutes in many states allow courts to include certain non-probate assets when calculating the surviving spouse’s elective portion. In some jurisdictions, this can include life insurance policies, especially when premiums were paid with marital funds or when the policy was intentionally used to disinherit the surviving spouse. As a result, even if the deceased named another person as beneficiary—such as an adult child, parent, or new partner—the surviving spouse may still assert an elective share claim that effectively reduces or overrides the beneficiary’s payout. These cases often require a life insurance lawyer to analyze state-specific elective share rules, marital property laws, and the financial history of the policy to determine whether the spouse is entitled to a portion of the life insurance proceeds.
Can a Beneficiary Be Changed After Death?
No. Once the insured dies, rights to the benefit transfer immediately to the named beneficiary. If a change form was submitted before death but received afterward, the insurer will rely on policy rules to determine whether the change is valid.
If you suspect a fraudulent or post-death beneficiary change, consult a life insurance lawyer immediately.
State vs. Federal Law: Which Applies?
Before evaluating a dispute, a life insurance attorney must determine whether the policy is governed by:
State law, or
Federal law (ERISA, FEGLI, SGLI, VGLI)
Policies obtained:
Through an employer (ERISA)
Through federal employment (FEGLI)
By active or retired military members (SGLI/VGLI)
…are typically governed by federal rules, which may override state statutes such as:
Community property rights
State laws voiding ex-spouse designations
Probate code provisions
These cases require specialized knowledge of federal beneficiary rules.
Does a Will Override a Life Insurance Beneficiary?
No. A will cannot change or override the beneficiary on a life insurance policy. The insurance company must pay the person listed on the policy, regardless of what the will says.
Who Can Contest a Life Insurance Beneficiary Designation?
Anyone with a legitimate legal interest may challenge a designation, including:
Ex-spouses
Current spouses
Children or grandchildren
Siblings or other family members
Caretakers
The estate
Creditors (in rare situations)
These disputes often involve claims of:
Undue influence
Duress
Fraud
Mental incapacity
Violations of court orders
Mistakes in paperwork
A life insurance dispute attorney is crucial for navigating these complex issues.
What Happens When a Life Insurance Beneficiary Is Contested?
A beneficiary dispute can be resolved in several ways:
1. Insurance company decision
The insurer reviews the evidence and makes a determination.
2. Settlement agreement
Parties may agree to split the payout to avoid litigation.
3. Interpleader action
The insurance company deposits the funds with the court and removes itself from the case.
4. Lawsuit
A judge decides who receives the life insurance payout.
Because legal fees may be deducted from the policy during interpleader proceedings, many clients prefer to negotiate a resolution with their life insurance lawyer beforehand.
How to Prevent Beneficiary Disputes (For Policyholders)
Policyholders can reduce the likelihood of future disputes by:
Updating beneficiaries after marriage, divorce, birth, or adoption
Following policy instructions precisely when making changes
Informing former beneficiaries of changes
Reviewing the policy regularly with a life insurance attorney
What to Do if You Are Involved in a Life Insurance Beneficiary Dispute
If you are facing a contested beneficiary claim, do not fight the insurance company—or another claimant—alone. These disputes require:
Analysis of policy language
Review of medical and legal documents
Understanding of state and federal law
Strategic negotiation or litigation experience
Our life insurance lawyers will investigate your claim, protect your rights, and fight for the payout you deserve. We work on a contingency fee basis, meaning you pay nothing unless we recover the benefits for you.
Call for a Free Consultation
If you are involved in a life insurance beneficiary dispute, call (888) 510-2212 for a free, confidential consultation. Our life insurance attorneys have successfully handled disputes involving ex-spouses, estates, adult children, caretakers, and competing beneficiaries—and we are ready to help you.
