Life insurance, which frequently names the spouse as the primary beneficiary, protects family members in the event of death. Certain states, such as California, Nevada, and Washington, give registered domestic partners legal rights to an estate, and spouses have special legal rights in estate law after death. However, can a spouse override a life insurance beneficiary especially when they are not named in your policy?
No, a spouse cannot override a life insurance beneficiary, but there are exceptions permitted by state law, which the courts decide. State law pays death benefits after the policyholder passes away. A spouse cannot override term life insurance beneficiaries; only the policyholder may alter beneficiaries under active policies. However, even the policyholder cannot change the beneficiary, rendering them irrevocable.
Life Insurance Beneficiaries
The beneficiary, who can be named multiple times for equal or different portions, receives the death benefit from your life insurance policy upon death. Even if they are not your current spouse, the primary beneficiary in most states gets the entire payout. Your spouse might be entitled to half of the death benefit if your primary residence is in a state that allows community property, with the insurance company allocating the payout following state law.
Generally, the payout is divided equally by community property rulings. According to the community property:
- Arizona.
- California.
- The state of Idaho.
- Nevada.
- Louisiana.
- Mexico.
- Washington.
- Texas.
- Wisconsin.
Life Insurance Beneficiary Designations
Understanding life insurance beneficiary designations is crucial before exploring the possibility of a spouse overriding a beneficiary. You must designate one or more beneficiaries when you buy a life insurance policy, as they will be the ones to receive the death benefit upon your passing.
The following are the main categories of beneficiaries on a life insurance policy:
Primary beneficiary
The death benefit will be paid to the primary beneficiary first. The primary beneficiary will be eligible to receive the entire benefit or the specified percentage if they are still living at the time of the policyholder’s passing.
Contingent beneficiary
If the policyholder dies, a secondary beneficiary, also known as a contingent beneficiary, takes precedence over the primary beneficiary. Additionally, the contingent beneficiary will receive the death benefit if the primary beneficiary is not still alive.
Why Would a Spouse Want To Override a Life Insurance Beneficiary
Generally, if you believe you are your spouse’s designated beneficiary, you should consider your options if you discover otherwise. A spouse may not be listed as the beneficiary for several reasons:
- The dead spouse neglected to update the beneficiary when they bought the policy before marriage.
- The deceased may have designated another person to receive the benefits, such as an adult child or a cherished charity, instead of a spouse.
- The remaining spouse may be left with other assets that are at least as much as the insurance payout.
- Reasons that were never disclosed were unknown (and unknowable).
Spouses losing life insurance may contest the beneficiary due to difficulties in living or mortgage payments. This is typically due to their dependency on their spouse. Their capacity to work may also be hampered by the time they need to take off to grieve and heal from the loss. Furthermore, expenses associated with dying can mount up, and surviving spouses may feel deceived by their spouse.
Can a Spouse Override a Life Insurance Beneficiary
It is important to make clear that a spouse cannot directly override a beneficiary designation on a life insurance policy without the policyholder’s permission. The policyholder can change the beneficiary designation at any time during their lifetime, and it is a legally binding agreement.
Policyholder’s consent
A policyholder must start the process on their own if they want to modify the beneficiary designation on their life insurance policy. Generally, this includes contacting the insurance provider and formally requesting that the beneficiary details be updated. The policyholder has the option to change beneficiaries or make other adjustments as necessary. Furthermore, a spouse is not permitted to make these modifications on the policyholder’s behalf.
Spousal rights
However, when it comes to life insurance policies, states like New York recognize specific spousal rights. The purpose of spousal rights is to safeguard the interests of a surviving spouse, especially when the policyholder has designated a beneficiary other than their spouse. In New York, state law offers the surviving spouse specific coverage if the policyholder names a beneficiary other than their spouse. This coverage includes elective share and community property states.
Post-divorce considerations
It’s important to remember that after major life events like divorce, beneficiary designations may need modification. The policyholder’s beneficiary designation is automatically revoked by law if they choose their spouse as the beneficiary and later divorce. To make sure that beneficiary designations align with the policyholder’s intentions, it is essential to seek legal advice as this may not apply to all life insurance policies.