Can you explain contested benefits for life insurance payments?
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Asked June 18, 2012
In a perfect world, the beneficiaries named in your life insurance policy will receive the specified amount of the benefits after you have passed away. Unfortunately, this is not a perfect world, and unless you take care in how your policy is written, you could leave those beneficiaries with no choice except to contest the beneficiaries named in the policy. Since contesting the benefits of a life insurance policy could tie up or even waste away the benefits, the best solution is to be aware of ways the benefits could be contested, and make sure that your policy is written to avoid those situations.
One way that the benefits of a life insurance policy can be contested is when the proceeds of the policy have been left to a third party rather than the descendants of the deceased. For example, if the proceeds of the policy were left to a charity that performs cancer research, then the spouse or offspring of the deceased could contest the policy on the grounds that the dependents of the insured have not been addressed.
Another way that life insurance benefits can be contested is when one dependent is left out of the will. The benefits could be challenged on the grounds that the person who was omitted was left out inadvertently, or that the policy was purchased before one or more descendants were born; meaning that the policy should have been updated but never was, for whatever reasons.
Typically, unless direct dependents such as a spouse of children are involved, challenging he beneficiaries of a life insurance policy can be difficult. For example, a creditor could not place a lien against the inheritance to try and get any money the deceased owed. The only people who have the right to challenge the benefits of a life insurance policy are those who, by marriage or blood, can show an insurable interest in the policy.
When you're comparing life insurance quotes, speak with the agent to get more information about the possibility of life insurance claims being contested.
Answered June 18, 2012 by Anonymous