Divorce and Life Insurance
June 18, 2009
If you think you are certain to receive the proceeds of a life insurance policy if you’re the named beneficiary, think again. In the case of Hadfield v. Lillo, the former wife of the insured, who was the primary beneficiary of his Police & Fireman’s group life insurance, will not be receiving the proceeds of his policy.
The court held that there is no vested interest in the proceeds of a life insurance policy since the beneficiary can be changed at any time. Unless the policy, a Will, a court order or other “governing document” creates a contractual right to receive those proceeds, divorce or annulment cuts off a former spouse’s right to receive life insurance proceeds. That was not the law at the time these parties divorced. Nonetheless, the court ruled the current statute applies.
Therefore, be forewarned. If you get divorced and expect to receive the benefits of your former spouse’s life insurance policy upon his or her death, be sure your Judgment of Divorce clearly states this right.
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