Life Insurance And Divorce From Spouse Beneficiary

There are times when life insurance claims can be complicated by a divorce.  This is illustrated in a 1997, Amarillo Court of Appeals opinion styled Sever v. Massachusetts Mutual Life Insurance Company.
The issue in this case was whether the oral redesignation of beneficiary after a divorce redesignating the former spouse was effective.  The Texas Insurance Code, section 1103.054 requires the designation of a beneficiary to be in writing.  Texas Family Code, section 9.301 requires that, upon divorce, a provision in a life insurance policy in favor of the former spouse is not effective unless the insured redesignates the former spouse, or the former spouse is designated to receive the proceeds in trust for or on behalf of the benefit of a minor child.  In this case, the insured allegedly orally redesignated the former spouse.
The appellate court held that upon the rendition of the divorce decree, the designation of the former spouse was rendered ineffective by operation of law.  Because a secondary beneficiary was not designated, the policy proceeds were payable to the insured’s estate.  The policy provisions and Insurance Code requiring that the beneficiary be designated in writing controlled.  Consequently, oral statements to the insurance agent were not effective under the policy provision and the Insurance Code to redesignate the former spouse as beneficiary.
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