I was reviewing a legal synopsis of a contested life insurance beneficiary situation this morning and it reminded me just how important it is to make those changes in a timely fashion, and then double check to make sure it has been done.
In this particular case the policy owner divorced and remarried and when he married again he contacted an agent for a beneficiary change form to change from his ex wife to his new wife. They received the form, completed, signed and dated it and sent it back to the agent for forwarding to the life insurance carrier, the Principal. The problem was that the agent had provided a beneficiary change form for the wrong company and he forwarded the completed form to Humana, his health insurance company.
Neither he or the agent followed up on the situation when no confirmation was received from the Principal and a few months later the insured passed away. Shortly after his death the Principal received competing death benefit claims, one from the ex wife who was actually still shown in their records as the beneficiary and one from his current wife who was not shown as a beneficiary.
This case was resolved, as it should have been, in favor or his current wife. While the wrong form was used by the agent and it was sent to the wrong company, once the Principal received a copy of the written request for change of beneficiary, they honored it. Fortunately in this case the Principal doesn’t require that the request be on their form, but rather any written request whether in a letter format or even, as in this case, on another company’s form.
A few important points should come from this. First and foremost, remember to change beneficiaries. All too often it is overlooked and the life insurance proceeds don’t go where the insured intended. Second, make sure you tell your agent that you want confirmation of the change and you want the agent to follow up with the company if that confirmation doesn’t come in a timely fashion. And lastly, just to have it on file, send a letter to the old beneficiary letting them know that they are no longer due any proceeds from your life insurance. Send it return receipt and save that in your policy.
Bottom line. Life changes are often a bit chaotic, so make a list and work your way through it. Changing wills, trusts and life insurance designations should be right at the top of the list.