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Does a divorce release someone as beneficary on an insurance policy?

Does a divorce release someone as beneficary on an insurance policy?

Full question:

Party A and Party B get a divorce after Party A was named beneficiary on Party B's life insurance policy. After Party's B death, Party A was told that the divorce released her/him automatically as a beneficiary. Can Party A be automatically released as beneficiary or does Party A have rights to receive funds from the policy?

Category: Wills and Estates
Date: 04/07/2025
State: Alabama

Answer:

If the state law says the beneficiary designation of an ex-spouse lapses on divorce, and requires a filing of a new beneficiary designation or language in the divorce decree, and there is no beneficiary, the insurance company would pay a "contigent beneficiary" if any, and if none, the deceased's estate ultimately goes according to the will or the laws of intestate distribution of his/her state.

This may vary from state to state. It also may be impacted by the language of the divorce decree or separation agreement.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

How does divorce affect life insurance?

Divorce can impact life insurance policies significantly. In many states, a divorce automatically revokes a spouse as a beneficiary unless stated otherwise in the divorce decree. This means that if a policyholder dies after the divorce, the ex-spouse may not receive any benefits unless they are specifically named again. It's important for individuals going through a divorce to review their life insurance policies and update beneficiary designations accordingly.

Does divorce affect beneficiaries?

Yes, divorce often affects beneficiaries on life insurance policies. In some states, a divorce automatically cancels the ex-spouse's status as a beneficiary. If the policyholder does not update the beneficiary designation after the divorce, the benefits may go to contingent beneficiaries or the estate, depending on the policy terms. It's advisable to review and modify beneficiary designations during or after a divorce.

How does a divorce affect the beneficiary of a life insurance account?

A divorce can lead to the automatic removal of an ex-spouse as a beneficiary in some states. If no new beneficiary is designated, the life insurance proceeds may go to contingent beneficiaries or the deceased's estate. Therefore, it's crucial for policyholders to update their beneficiary designations post-divorce to ensure their intended recipients receive the benefits.

Does divorce void life insurance beneficiary?

In many jurisdictions, a divorce can void the designation of an ex-spouse as a beneficiary on a life insurance policy. This means that if the policyholder dies after the divorce, the ex-spouse may no longer be entitled to the benefits. However, this can vary by state, so it's essential to check local laws and update beneficiary designations accordingly.

Does a divorce decree override a named beneficiary?

A divorce decree can override a named beneficiary if it explicitly states that the ex-spouse should not receive any benefits from life insurance policies. However, if the decree does not address beneficiary designations, the named beneficiary may still be entitled to the proceeds. It's important to clarify this in the divorce proceedings and update the beneficiary designations to reflect any changes.