Did you know that many times an problem comes up on who to pay the life insurance benefits? Especially on policies that were first purchased years ago, sometimes the paperwork on who should be the beneficiary has not been properly updated. Or, sometimes the paperwork has been updated, but the people who were changed out as beneficiaries are not happy about it.

The insurance company has to pay the right beneficiary. The insurance policy is a contract, even a special type of contract, and it must be followed. But an insurance company can get in trouble for paying obviously the wrong beneficiary–but the right beneficiary needs to act to make things work out right. What do we mean?

In just a decade of a person’s life, they can change jobs, have a marriage, a divorce, even another marriage, and children from various situations. The person may want to update the beneficiary forms on file with a life insurance company. Updating beneficiary forms is an important part of an estate plan. When a form is out of date, it can create real problems. If a person owns a life insurance policy, and marries again, they may not want their ex-husband to receive all the life insurance benefits.

Insurance companies do not like beneficiary issues because, for an insurance company, their biggest decision is if they really have to pay the life insurance benefits. If there is a way to avoid that payment of the life insurance benefits–great (to their bottom line)– and they will take that approach. But once there is no defense to avoid payment, the life insurance company isn’t really interested in who gets the money. They are so uninterested, that often, if there is a dispute, the life insurance company will interplead the funds, meaning they will open an action with the Court, and pay the life insurance benefits to the Court clerk. The Court will then hold the money, and the beneficiaries will have to litigate out in Court, for the judge to decide who gets the life insurance benefits. The life insurance company avoids making that decision, so they feel they avoid any exposure to making the wrong decision. Amazingly, the life insurance company will often make a claim of its own against the life insurance benefits–for attorney fees and costs–for the process of paying your life insurance benefits to the Court. Those fees can run as high as $30,000 to $40,000 depending on all the circumstances, and are a terrible loss to the policy. (We know how to fight that claim for fees and costs.)

Beneficiary issues can involve additional lawsuits, investigations, and serious allegations of wrongdoing, including murder, which may or may not have any accuracy. The involvement of Probate Courts and judges can occur. These are very serious investigations and litigations; they determine who gets the life insurance benefits, and emotions run strong. We will effectively handle whatever beneficiary issues are involved.