A Policyowner’s Rights Are Limited Under Which Beneficiary Designation?

When it comes to beneficiary designations, the policyowner’s rights are very limited. As the owner of a life insurance policy, you can specify the person or people you want to receive the policy proceeds after your passing. The beneficiary designation will ultimately determine who will receive the proceeds from your policy. It is important to understand that the policyowner’s rights are limited with regards to changing or revoking the designated beneficiary.

Limitations of Beneficiary Designations

The limitations put in place to protect the policyowner are such that the beneficiary designation only applies after the policyowner’s death. Any changes can only be made during the policyowner’s lifetime or by a court order. This means your beneficiary designation cannot be changed or revoked without written permission from the policyowner or a court order. Additionally, any changes must be done according to the state’s regulations.

In addition to the limited changes to the beneficiary designation, the policyowner also has limited control over how the proceeds are distributed. The beneficiary designation is typically the first thing reviewed when a life insurance policy is processed and the proceeds are disbursed. If you do not designate a beneficiary, the policy proceeds are typically distributed based on the laws of the state in which the policy was written.

The Legal Rights of Beneficiaries

When it comes to beneficiary designations, the legal rights of beneficiaries are also important to consider. Once a beneficiary is named, the life insurance company will generally recognize their legal rights and assume that the beneficiary will collect the proceeds from the policy. This means the life insurance company will not consider any changes to the beneficiary designation after the policyowner’s death, unless a court order is presented.

In some cases, a beneficiary may be able to dispute the beneficiary designation. This is usually due to a dispute over who the policyowner intended the money to go to after their death. If the beneficiary dispute is successful, the court will typically require the policyowner to amend the beneficiary designation accordingly.

Conclusion

It is important for policyowners to understand their rights are limited when it comes to beneficiary designations. The policyowner has limited control over how the proceeds are distributed and cannot change or revoke the beneficiary designation without written permission or a court order. Additionally, the legal rights of beneficiaries must be respected and any disputes must be settled through the court system. With these considerations in mind, it is important to think carefully when naming a beneficiary and take all necessary steps to ensure your chosen beneficiary is legally entitled to the proceeds.