Can you please provide a few examples of ‘conteested benefits’?
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Asked June 11, 2012
In life insurance, contested benefits are any benefits that have been set aside in the life insurance policy but which are being disputed at the time of claim settlement. To avoid contested benefits, life insurance policies should have the beneficiaries carefully identified, along with secondary beneficiaries in the event that the insured outlives the named beneficiaries. Here are a few examples of contested benefits on life insurance policies to give you an idea of how and when benefits can be challenged.
One of the most common examples of a life insurance policy having contested benefits is when the policy is left to specific descendants, but does not include them all or does not split the proceeds up equally. The person or persons who feel that they are not receiving a fair share of the policy proceeds could challenge the policy. In the event of a potential beneficiary being left out of the policy completely, the argument could be used that the policy was not updated since the youngest person who born, and that he or she being omitted is an oversight.
If the benefits of a life insurance policy are left to a charity or other organization, the surviving family members have the option of contesting the benefits of the policy. In this case, it will be up to the surviving family members to prove that the deceased would have wanted them to retain control, even over the portion being donated to charity.
Basically, the only times that the beneficiaries of a life insurance policy can be contested are when the beneficiaries named in the policy are being challenged as the rightful heirs, or when someone who is not named in the policy feels that they have an interest in the policy. This is why, when a large estate is being divided, the lump sum is generally left to the estate and then the estate divided up by the executor according to the wishes of the deceased.
Answered June 11, 2012 by Anonymous