Can a Life Insurance Beneficiary Be Changed After Death?


Updated: October 28, 2024

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When purchasing life insurance, carefully considering who will receive your assets or the payout (a "death benefit" from your policies) is wise. Generally, a beneficiary designation cannot be changed or corrected once you pass away. The designation of a beneficiary is legally binding, and the insurance company pays out the death benefit according to the policyholder's latest valid designation.

Sometimes, a life insurance beneficiary dispute may arise if someone challenges the named beneficiary in a life insurance policy. This could be due to suspicion of fraud, belief of being unjustly excluded or perceived errors in the policy. In such cases, the party seeking to contest the life insurance beneficiary must prove their claim in court.

Key Takeaways

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A life insurance beneficiary is the person or entity designated to receive the death benefit from a life insurance policy.

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A life insurance beneficiary can be changed after death only through legal contestation and court order.

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Those who can contest a life insurance beneficiary may include the policyholder's estate, co-beneficiaries, spouses, children and creditors.

When Can a Life Insurance Beneficiary Be Changed After Death?

A life insurance policy is a binding contract that specifies who will receive the death benefit. However, a few instances exist when another party can contest the life insurance beneficiary upon the policyholder's death.

A contestation is a legal challenge to the named beneficiary on a life insurance policy. It typically comes about when someone believes they were unjustly excluded or when there's suspicion of fraud or manipulation. The contesting party must present their case in court for resolution.

A beneficiary change can occur after death through contestation due to the following reasons:

  • Policy Terms and Conditions: If the policy explicitly allows changing the beneficiary on life insurance after the policyholder's death, the update can proceed.
  • Beneficiary Disclaimer: If a beneficiary disclaims the benefits, the insurance company will distribute them to the contingent beneficiaries of the life insurance (secondary beneficiaries) or the policyholder's estate.
  • Invalid Beneficiary Designation: A court may rule to change the life insurance beneficiary if the initial beneficiary is not legally valid.
  • Court Orders: In divorce or child support obligations, a court might order a change in the beneficiary of a life insurance policy.
  • Suspected Fraud or Undue Influence: A court might allow a change of life insurance beneficiary if a policyholder was manipulated or coerced into naming a specific beneficiary.
  • Minor Beneficiary: If the life insurance beneficiary is a minor, the estate can appoint a legal guardian to manage the proceeds until the child reaches legal age.

Each case is subject to different state laws and the specifics of the insurance policy, so it may be best to consult with a legal professional or insurance expert to understand your specific situation.

Who Can Contest a Life Insurance Beneficiary?

The right to contest a life insurance beneficiary designation is generally limited to those with a legitimate and direct interest in the policy proceeds. Here's a list of people who typically have standing to challenge a life insurance beneficiary:

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    Policyholder's Estate

    The executor or administrator of the estate might step forward to contest the life insurance beneficiary if the policy proceeds were intended to be part of the overall estate.

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    Co-Beneficiaries

    If there are multiple beneficiaries and there is suspicion of fraud or undue influence, a co-beneficiary may contest the life insurance beneficiary designation.

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    Spouses or Ex-Spouses

    Depending on the terms of a divorce decree or marital property rights, a current or former spouse might have grounds to contest the beneficiary of a life insurance policy. This is especially possible if spouse beneficiary rules are not followed.

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    Children of the Policyholder

    Children may have the right to contest if they were excluded as beneficiaries, especially when a new spouse is the primary beneficiary of the life insurance.

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    Creditors

    If the deceased owed significant debts, creditors may contest a life insurance beneficiary designation in an attempt to collect on their debt.

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    Other Entities With a Valid Claim

    Business partners, charitable organizations or others named in a will or previous policy, which the latest policy omits, may contest the life insurance beneficiary.

Anyone considering contesting a life insurance beneficiary may benefit from consulting a lawyer specializing in life insurance claims. Legal professionals can offer clarity on life insurance beneficiary rules and the specifics of contesting life insurance beneficiary designations, ensuring adequate representation of your rights and interests.

How to Change a Life Insurance Beneficiary After Death

A contest can trigger a possible change in a life insurance beneficiary. This involves a complex legal process, potentially leading to a court-ordered beneficiary adjustment.

1
Identifying Grounds for Contest

The person who wishes to contest the life insurance beneficiary designation first determines if there are legitimate reasons for the contest, such as suspected fraud, coercion or an invalid beneficiary designation.

2
Filing a Lawsuit

The contesting party files a lawsuit against the insurance company and possibly against the named beneficiary of a life insurance policy. The lawsuit should present arguments and evidence supporting their claim.

3
Court Evaluation

The court evaluates the evidence and arguments. If the contest is found valid, the court can order the insurance company to pay the death benefits to a different beneficiary.

4
Implementing the Court Order

The insurance company then must follow the court's order to pay the death benefits to the new beneficiary designated by the court.

How to Protect a Life Insurance Beneficiary

Getting a life insurance policy can be a key part of financial planning, serving as a safety net for your loved ones. Taking some extra steps can help ensure that your chosen life insurance beneficiaries receive the death benefits in the event of a tragic loss.

  • Specify Your Beneficiaries: Your policy should clearly state the full names of your beneficiaries to avoid any ambiguity.
  • Update Your Policy: Keep your policy current. Review and update it regularly, especially after significant life events like the death of a beneficiary, birth of a child, marriage or divorce.
  • Appoint an Irrevocable Beneficiary: An irrevocable beneficiary cannot be changed without their consent, providing an additional layer of security against disputes.
  • Use Per Stirpes or Per Capita Designations: If the beneficiary dies before the insured, their share will go to their descendants (per stirpes) or be distributed equally among remaining beneficiaries (per capita).
  • Communicate Your Decisions: Let your family and loved ones know about your life insurance policy and your choice of beneficiaries. This openness can help avoid disputes later.
  • Hire a Professional: Consult with a financial advisor or an attorney specializing in estate law. They can guide you in structuring your policy to meet your goals and protect your life insurance beneficiaries.
  • Set Up a Trust: If you have concerns about a beneficiary’s ability to manage the proceeds, consider creating a trust. You can designate the trust as the beneficiary of your policy and stipulate how, when and for what purposes the money can be used.

The best defense against beneficiary contests can be a well-structured and regularly updated life insurance policy.

FAQ About Contesting a Life Insurance Beneficiary

Although it's typically not possible to change a life insurance beneficiary after the policyholder's death, there are circumstances when someone else may contest the beneficiary. Below is a list of commonly asked questions to help you better understand a beneficiary contest and how it works.

What is a beneficiary for life insurance?
Who can be a life insurance beneficiary?
Do you need a Social Security number for a life insurance beneficiary?
How do you split life insurance beneficiaries?
Which type of life insurance beneficiary requires the beneficiary's consent when a change of beneficiary happens?
What is a contingent beneficiary for life insurance?
Can a child be a contingent beneficiary?
Can a life insurance beneficiary be changed after death?
Can the owner of a life insurance policy be the beneficiary?
Is your spouse automatically your beneficiary on life insurance?
Can a life insurance beneficiary be contested?
Who can contest a life insurance beneficiary?
On what grounds can a life insurance beneficiary be changed after death?
How long do interested parties have to contest a life insurance beneficiary?
What is the process for contesting a life insurance beneficiary?
What types of expenses can your life insurance beneficiary pay for with the benefit?
Who gets life insurance if the beneficiary is deceased?
Who can change the beneficiary on a life insurance policy?
Can a spouse override a beneficiary on a life insurance policy?
Can a power of attorney change a beneficiary on a life insurance policy?
Can a will change a life insurance beneficiary?
How will divorce change a life insurance beneficiary designation naming a spouse?
What happens if the beneficiary dies before the insured?
What happens if there is no beneficiary on a life insurance policy?
When can a policyholder change a revocable beneficiary?
Under which beneficiary designation are a policyholder's rights limited?
Who can change an irrevocable beneficiary?
Can a life insurance policy be contested?

About Melissa Wylie


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Melissa Wylie is the Content and SEO Manager at MoneyGeek, with nearly a decade of editorial experience and six years of work in financial content focused on small businesses. She previously held SEO positions at Bankrate and LendingTree, with bylines on ValuePenguin and MagnifyMoney.

Wylie has a journalism degree from the University of North Texas. Her strong foundation in journalism helps her craft content that simplifies complex financial topics to help everyone feel confident when making decisions with their money.