Contesting A Beneficiary
Contesting a beneficiary on a life insurance policy can be a very tricky and costly venture. The Insurable Interest provision was eliminated in 1991 to pave the way for other types of domestic partnerships to be treated as fairly as married couples. The insured party has the right to name whom they wish as their beneficiary. Courts will always take a special interest in cases where the deceased was elderly and recently changed their policy to reflect a new care person or “friend.” Unfortunately, the insurable interest needs to only be a factor when the policy is purchased. That is why it is vital to keep the beneficiary up-to-date on the policy.
If the deceased was in their right mind at the time they named the beneficiary, it can be very difficult to contest the insurance policy, though not impossible. Special circumstance can be taken into consideration when a policy is up for contest. If only one sibling is named in the life insurance policy, then a judge might split the policy pay out between on the children of the deceased.
Ultimately, it is up to the policyholder to keep their beneficiary current and relevant to their current situation. When it comes to naming children as beneficiaries, it is not necessarily a good idea. The children will typically not have access to the money until they are eighteen years old. Therefore, immediate expenses that need to be covered will not be paid through the life insurance policy. It is always a good idea to name the children’s primary caretaker (besides you) as the beneficiary. If you are divorced you can set up a trust for the children that will become available to them on their eighteenth birthday.