Life Insurance and Divorce: 4 Real Cases That Decide Who Gets Paid
Divorce changes nearly every part of a family’s financial life — but one area people often overlook is life insurance beneficiary designations. A divorce decree may divide the house, the retirement accounts, and the debts, but who gets the life insurance money after divorce is not always as simple as people assume.
Many policyholders think their divorce automatically removes an ex-spouse. It doesn’t always. Others assume their children are protected because the divorce order says they must remain beneficiaries. That isn’t always enforced either. And when policies fall under federal law (like FEGLI, SGLI or ERISA), the outcome can be the exact opposite of what the family expected.
As a life insurance attorney, I regularly handle cases where grieving families are blindsided — not by the insurer, but by the legal rules that govern beneficiary changes after a divorce. The four real cases below show exactly how complicated these disputes can be, and why legal help often makes the difference between winning or losing a claim.
Why Divorce Complicates Life Insurance
When a divorce occurs, several conflicting rules come into play:
1. State revocation-on-divorce laws
Many states have statutes that automatically remove an ex-spouse as beneficiary unless the policyholder reaffirms them after the divorce.
2. Federal laws (ERISA, FEGLIA, SGLIA)
Employer-sponsored life insurance (ERISA), federal employee life insurance (FEGLI) and servicemember’s life insurance (SGLI) often override state laws. That means the ex-spouse may remain the beneficiary even if the divorce decree says otherwise.
3. Divorce decrees and settlement agreements
Some divorce orders require a parent to maintain life insurance for the children — but if the beneficiary form isn’t updated or the divorce decree does not have the language required for the form to be upheld, courts must decide whether to enforce those obligations.
4. Human behavior
People forget to update forms. They assume the divorce “takes care of it.” They remarry. They move jobs. Years later, tragedy strikes — and the wrong beneficiary is still listed.
The result? Beneficiary disputes, interpleader lawsuits, and families fighting in court.
Real Life Example #1: Court Strips Ex-Wife of Life Insurance After Divorce — Even Without a New Form
In Sveen v. Melin (2018), Mark Sveen bought a life insurance policy naming his wife, Kaye, as the beneficiary. Later, Minnesota enacted a law saying that after a divorce, your ex-spouse is automatically removed as beneficiary unless you explicitly reaffirm them.
Mark and Kaye divorced. He never updated the policy. When he died, both the ex-wife and his children claimed the money.
The case went to the U.S. Supreme Court.
The Court’s Decision
The Court held that Minnesota’s revocation-on-divorce statute was valid, even though Mark purchased the policy before the law existed. That meant:
✔ The ex-wife was legally treated as removed
✔ The children became the rightful beneficiaries
Why This Case Matters
This case shows that:
In many states, divorce alone automatically removes an ex-spouse from private life insurance.
But this only applies to non-ERISA (non-employer) policies.
Families should never assume the designation mirrors the divorce decree.
This is the perfect example of how state law can protect family members when a policy owner forgets to update forms.
Real Life Example #2: Ex-Wife Gets Paid After Divorce Because ‘Old Form Wins’ Under Federal Law— Egelhoff v. Egelhoff (2001)
State divorce laws discussed above don’t apply to employer-sponsored life insurance. This case flips the previous outcome on its head. David Egelhoff worked for Boeing and had life insurance governed by ERISA (a federal law controlling most employer-based benefits). He had named his wife Donna as beneficiary. They later divorced. Two months after the divorce, David died in a car accident.
Washington state had a law similar to Minnesota’s: divorce automatically revoked an ex-spouse’s beneficiary rights. David’s children argued that Donna should be removed. Donna argued that ERISA required the insurer to pay whoever was listed on the form.
The Supreme Court’s Decision
The Court ruled:
✔ ERISA preempts state revocation-on-divorce laws
✔ The plan administrator must pay the ex-spouse, because she remained the named beneficiary
Why This Case Matters
If the life insurance is governed by ERISA:
Divorce does not automatically revoke the ex-spouse
Courts must follow the last signed beneficiary designation, even if outdated
Children and current spouses often lose the claim
This is one of the most heartbreaking issues I see in my legal practice. Families think the divorce decree controls, but if the policy is through work, the federal rules often override everything.
Real Life Example #3: Ex-Wife Beats New Wife for $124,000 Life Insurance Payout — Divorce Didn’t Matter — Hillman v. Maretta (2013)
Federal employee life insurance (FEGLIA) prioritizes the named beneficiary, not the spouse. Warren Hillman, a federal employee, had a FEGLI life insurance policy. He named his then-wife, Judy, as beneficiary. They divorced. Warren remarried, but never updated the beneficiary form. When he passed away, the insurer paid the entire benefit (over $124,000) to the ex-wife, Judy. Warren’s current wife, Jacqueline, tried to use a Virginia law that allowed a new spouse to sue the ex-spouse to recover the benefits.
The Supreme Court’s Decision
The Court ruled:
✔ FEGLIA preempts state laws allowing recovery from an ex-spouse
✔ The ex-wife keeps 100% of the life insurance
✔ The current spouse has no remedy, even if the insured’s intent seemed obvious
Why This Case Matters
Federal employee life insurance is powerful — and unforgiving:
Divorce does not automatically change this
A new spouse may be legally entitled to nothing.
This case is a cautionary tale for anyone who has divorced and remarried:
If you don’t update your FEGLI form, your ex-spouse may be guaranteed the money — no matter what your will or divorce decree says.
Real Life Example #4: New Husband Forced to Surrender Life Insurance — Court Says Money Belongs to the — Flanigan v. Munson (2003)
Courts impose a constructive trust when the policyholder violated a divorce order. In Flanigan v. Munson, Lori Flanigan and her first husband divorced with a written settlement agreement requiring them to:
✔ Keep their children as irrevocable beneficiaries on life insurance until emancipation
Lori remarried. At her new job at Exxon, she obtained two life insurance policies — but never listed her children as beneficiaries on the forms. When Lori died, Exxon paid more than $200,000 to her new husband, Craig, because under the plan rules he was the default recipient. Lori’s parents sued on behalf of the children, arguing that the divorce agreement gave the kids rights to the life insurance.
New Jersey Supreme Court Decision
The Court agreed and imposed a constructive trust:
✔ The new husband had to surrender the life insurance money
✔ The children were entitled to the proceeds based on the divorce judgment
✔ The divorce agreement effectively created enforceable legal rights
Why This Case Matters
This case proves:
A divorce decree can outweigh a beneficiary form when it creates enforceable obligations
Courts can redirect life insurance to the rightful recipients
Families can win these cases — but only with strong legal advocacy
This is one of the clearest examples of a court enforcing a divorce agreement even though the paperwork was wrong.
What These Cases Teach Us
Across these four real-world cases, you see how differently the law treats life insurance depending on:
Whether the policy is private, employer-sponsored, or federally regulated
Whether the state has a revocation-on-divorce statute
Whether the divorce decree clearly requires coverage for children or an ex-spouse
Whether the policyholder updated the beneficiary form—or failed to do so
If You Are Divorced, Here’s What You Should Do Today
Whether you are recently divorced, remarried, or handling a loved one’s estate, take these steps immediately:
✔ 1. Request copies of all life insurance policies
Include employer benefits, union benefits, and private coverage.
✔ 2. Review the beneficiary designations
Is the ex-spouse still listed? Are the children properly named? Is anyone missing?
✔ 3. Compare the policies to the divorce decree
Does the decree require life insurance for the children? Is it being followed?
✔ 4. Don’t rely on assumptions
Employer plans rarely honor state divorce laws. FEGLI never does.
✔ 5. Call a life insurance lawyer before you contact the insurer
The insurer will not give legal advice. But your actions at the beginning of a claim can make or break the case.
If You’re Facing a Life Insurance Dispute After Divorce, Call (888) 510-2212 for a free consultation
Whether you are fighting an ex-spouse, a new spouse, or simply trying to enforce a divorce decree, these cases show one thing:
The law is not straightforward. But you don’t have to navigate it alone.
I help families recover life insurance benefits when divorce has complicated the beneficiary designation. Many of my cases involve:
Ex-spouses still listed as beneficiaries
Divorce decrees requiring coverage for children
Employer-sponsored ERISA policies
Federal employee life insurance disputes
Interpleader lawsuits
Claims denied due to automatic revocation laws.
You likely have more rights than the insurer is telling you.
Call (888) 510-2212 Today for a Free Consultation
If you’re unsure who gets the life insurance after a divorce — or if a claim has already been filed — call me before the insurer pays the wrong person. Call (888) 510-2212 to speak with a life insurance attorney today.
