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Do I Need to Change the Designation on My Life Insurance Policy Following a Divorce?

Life insurance can provide your spouse, children, or other loved ones with critical financial resources upon your death. But it is important to understand that life insurance works a bit differently than assets you may leave to someone in your will or trust. A life insurance policy designates one or more beneficiaries to receive benefits upon your death. This beneficiary designation operates independently of your will or trust, unless you name your estate or trust as the beneficiary.

In most cases, a married person will name their spouse as beneficiary. But what happens if you get divorced after purchasing the policy? Can you change the beneficiary to someone other than your now-former spouse? Absolutely. All life insurance policies contain provisions for designating new beneficiaries.

Additionally, Pennsylvania law automatically revokes most spousal designations in life insurance policies upon divorce. Basically, the law presumes that you intended to remove your ex from the policy. You are, of course, free to re-designate your ex following the divorce. And in fact, some divorce settlements will actually require one former spouse to continue listing the other former spouse as their life insurance beneficiary.

Pa. Court Rules Oral “Designation” of Beneficiary Was Sufficient

Regardless of how you choose to proceed following a divorce, it is important that you promptly notify your insurance company–and seek the assistance of a qualified Pennsylvania Certified Elder Law Attorney–to ensure any changes to your beneficiary designation are made in accordance with the law. Any confusion on this issue may lead to litigation after your death between “dueling beneficiaries,” each of whom claim the right to the proceeds of the policy.

For example, the Superior Court of Pennsylvania recently addressed a policy dispute between the former wife and the brother of a deceased man named Gregory. Gregory married his wife, Kim, in 2000. In 2002, he purchased a life insurance policy from State Farm, naming Kim as the beneficiary and his brother, Allen, as the successor beneficiary.

Gregory and Kim divorced in 2018. After the divorce became final, Gregory called his State Farm agent. He told the agent he wished to keep Kim as the beneficiary of his life insurance policy, notwithstanding Pennsylvania law. The agent told Gregory that was fine and he didn’t need to take any further action.

After Gregory’s death, however, Allen claimed he was entitled to the policy benefits. A lower court judge sided with Allen, but the Superior Court reversed in Kim’s favor. The Superior Court explained that to comply with Pennsylvania law, Gregory had to make a “designation [that] was intended to survive the divorce.” Normally, this designation should have been made in writing–and not via a phone call–but the agent “incorrectly told” Gregory that was unnecessary. But given that it was “undisputed” that Gregory intended for Kim to continue as his beneficiary post-divorce, the Superior Court said that “under the circumstances,” his oral designation to the agent was sufficient.

Speak with a Pennsylvania Certified Elder Law Attorney Today

Even if you are not involved in a divorce, it is still a good idea to periodically review all of the designations on your life insurance and similar types of assets, such as your retirement accounts. If you need legal advice from an experienced Pennsylvania Certified Elder Law Attorney, contact Anderson Elder Law today by emailing or calling us at 610-566-4700 to schedule an initial consultation.