by Guest » Sun Nov 04, 2007 01:17 pm
My brothers 19 year old son just got killed in an auto accident. We think he had his 19 year old girlfriend ( that he planned to marry someday)as beneficiary on life ins. through his company. Can his parents think of contesting life insurance beneficiary and what are their chances?
Posted: Wed Nov 18, 2009 09:23 pm Post Subject:
bobbie, thats a terrible situation - my heart goes out to you. Do most life insurance policies pay out on suicide i thought this was a fairly common exclusion?
Posted: Thu Nov 19, 2009 12:06 pm Post Subject:
Do most life insurance policies pay out on suicide i thought this was a fairly common exclusion?
Most policys here, Hedrik, say that if suicide is commited within first year or two it's excluded or if the policy was purchased with the intent of commiting suicide it's excluded which of course would be hard to prove unless it's very early in the policy period.
Posted: Thu Nov 19, 2009 09:04 pm Post Subject:
yes, it's the 1-2 year exclusion I was thinking of....
In Bobbies situation this would seem to be very relevant informatio - could immediately put the kaibosh on a claim.
Bobbie, do you know how long before his passing the policy was taken out?
Posted: Sat Nov 21, 2009 06:40 am Post Subject:
My father always favored my sister and assigned his beneficary to her as well as my mother's life Insurance. Everything is in the Living Trust that splits the estate 70% and the rest of the 30% goes to me. I was told the life Insurance goes to the Benerficary 100%. What kind of crap is this? This is greedy!
Life insurance cannot be held in a living trust. A living trust (inter-vivos trust) is an estate planning tool and is a revocable instrument. The purpose of a living trust it primarily to escape probate costs.
As well, the beneficiary designations within a life insurance policy are pretty much set in stone and cannot be overturned by a will, trust instrument or most any other legal means including litigation.
InsTeacher 8)
Posted: Mon Nov 30, 2009 07:30 pm Post Subject:
"Under normal circumstances, policy benefits of the policy holder go to his wife and children and contesting that becomes difficult." Absolutely NOT TRUE if the discussion is life insurance proceeds!
There is no such thing as "normal circumstances" unless there is no named beneficiary, in which case the money legally goes only to the estate of the decedent, where it is up for grabs by creditors first. If anything is left after that, the family can (and usually does) fight over it.
Lori . . . as moderator of the forum . . . I notice that you offer a lot of poor advice. What is your professional background in insurance?
Knig188 says "Even though the odds are against you legally, I would definitely contest it. It is better to at least try . . . ." and you reply, "I agree 100% knig188, although the odds aren't good, better to fight and lose, than to not even try." Knig188 is either ill-informed or a lawyer.
To both of you, I simply say, don't waste your time and effort unless you can prove that the auto accident was caused by the girlfriend in order to collect on the death benefit (it wouldn't be a first). Whether she exerted any influence over his decision to name her as his beneficiary is immaterial, because only in the absence of proof of the 19-year-old's mental deficiency (which no one has mentioned yet) would a court even begin to try a case like this.
This is an instance where the beneficiary is the beneficiary is the beneficiary. He could just as easily have named his dog or goldfish as the beneficiary, and there would still be little a court might do about it.
So, please, stop offering advice from a position of sentiment or emotion. As others have pointed out, insurance is a contract. Address your replies from the perspective of contract law. The same as a court would be forced to apply in its decision.
Sound cold or callous? Perhaps, but it's the truth. Lots of good-hearted folks transfer their hard-earned money to lawyers who give false hope of collecting on highly emotional incidents such as the death of a loved one. Everyone but the lawyers lose in terms of money and additional emotional trauma.
This is certainly a dreadful event -- children are supposed to bury their parents, not the other way around. So let's not inflict any more trauma with bad advice such as "it's better to fight and lose . . . ." It is not better, at least not in this instance.
Posted: Mon Nov 30, 2009 07:47 pm Post Subject:
Just noticed heidrek's Nov 18 post. Suicide in most states is only an exclusion in the first two years of a new policy (in Colorado, for example, it is only one year, by law). After two years, the insurer must pay for death by suicide. The inclusion of language in the contract such as "while sane or insane" has no effect. In fact, Colorado insurance law explains that suicide committed by an insane person is an "accident" and cannot be the basis for a claims denial for death under an accidental death benefit provision of life or disability policy.
Posted: Mon Nov 30, 2009 08:05 pm Post Subject:
There is no such thing as "normal circumstances" unless there is no named beneficiary, in which case the money legally goes only to the estate of the decedent, where it is up for grabs by creditors first. If anything is left after that, the family can (and usually does) fight over it.
Look at some policies. Many have "default" beneficiaries, and the default beneficiary is not necessarily the estate.
Posted: Tue Dec 01, 2009 05:43 am Post Subject:
Andrea . . .
This is America, the land of the free, home of the brave, and domicile of idiots who find lawyers willing to cause a stir even when there is no chance of prevailing. Not that your nephew is an idiot.
Anyone can contest anything, but the insurance company is bound by its contract with your sister, which became an obligation to you following her death, to pay the proceeds to the named beneficiary.
Have you filed the death claim and received the check? If you did, it most certainly came in your name, and it's your money to do with as you please.
Can someone make a civil court case out of it? Yes, anything is possible, but in the absence of any showing of duress exerted by you on your sister to name you as the beneficiary, or your sister's mental deficiency at the time of beneficiary designation, the claim will go nowhere. Do you have any idea how long ago you were named the beneficiary? If it predates her illness/diagnosis by even one day, you are on even firmer ground. The longer into the past it occurred, the more secure is your position.
Depending on the amount of money you received, you might consider a token offering to your nephew. You can give up to $13,000 as a tax-free gift this year and again in 2010. Perhaps something along those lines would satisfy him. Was he "estranged" from his mother, or were they close? Makes a big difference, too.
Posted: Tue Dec 01, 2009 05:49 am Post Subject:
Afareve . . .
Please post just one example of what you are talking about! You are entirely wrong!! No insurance company is going to put itself at risk by declaring who the beneficiary is "by default." I can post dozens of example that all follow probate law common to all states: in the absence of a named beneficiary, the death proceeds will be paid to the estate of the policy owner (the insured in over 95% of all individual policies).
There is an entirely different rule for group insurance known as "per stirpes" which follows state probate law in the sense that the nearest blood relative may be presumed to be a beneficiary in the absence of a named beneficiary. This is so because many employees do not know they have the right to name a beneficiary, and the assumption under the law is that they would name their next of kin, which is not their spouse under "per stirpes."
Posted: Tue Dec 01, 2009 12:22 pm Post Subject:
MaxHerr, We've been down this road before. You are wrong. Look at a bunch of insurance applications. Many of them will say exactly what will happen if there is no living named beneficiary.
The insurance company isn't just declaring who will be beneficiary. It is part of the contract and the contract language has been approved by the state.
How can they automatically pay to the estate of the policy owner? If the policy owner is not the insured, and he is still alive, he has no estate!
Look at, for example, a Mass Mutual contract. It will explicitly tell you that if no named beneficiary is alive, the money will get paid to the policy owner if the policy owner is alive and to the policy owner's estate if the policy owner is dead.
Ex. We were business partners. I bought a policy on your life. The business breaks up. We're still friends, and we simply change the beneficiary to your wife. She dies. 6 months later you die. The death benefit will be paid to me.
Other contracts will list the order if there is no living beneficiary (spouse, children, parents, etc.)
Probate law has nothing to do with any of this. Probate only comes into play IF the money gets paid to the estate.
You can't point to any law that forbids the use of default beneficiaries. I can point to insurance contracts that have default beneficiaries.
I hope that you aren't one of those posters who can't admit when they are wrong.
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