Life Insurance Beneficiary Rules for Spouse

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  • Post last modified:October 7, 2019

Do you want to take a life insurance policy and you are couples? Are you worried about the rules of a beneficiary for a spouse? Are you wondering what will happen in case one of you passes on?

Or you have heard of length court cases about spouse beneficiary? You want to have the right information about every step that should be taken.

The benefits of life insurance are huge. Who doesn’t want to enjoy such benefits? As a result, sometimes many issues are revolving about the benefits hence the reasons for the rules.

The issue of a spouse and life insurance death benefits is a case that is confused by many people. Many people do not understand how everything works and the guidelines behind this.

Is Your Spouse Legally the Beneficiary?

It is a question that comes to many people’s minds.

The answer is No!

By virtue of being your spouse that does not make your husband or wife legally the beneficiary of your life insurance death benefits.

Here is Why

A life insurance policy is a legal contract between a policyholder and the insurance company. As a result, the terms of the agreement must be followed irrespective of your marital status.

In the contract, the insurer agrees to honor all the terms of the agreement. Upon your death, the insurer is required to pay all the benefits of the insurance policy to the named beneficiary in the contract agreement.

At this point, it does not matter whether the named beneficiary is your spouse or not.

The Spouse Being a Beneficiary

Several times policyholders have named people who are not their spouses as beneficiaries of their life insurance policies. Some people have opted to name their children, sibling, even friends.

However, the only way one can be a beneficiary as a spouse is making sure that your spouse names you as a beneficiary.

What this means is that you have to convince him/her to name you as the beneficiary of the life insurance.

What About in the Case of a Divorce?

When you are married, there is so much love. You care about your spouse, and you do not want them to suffer when you die. This is especially if you are the one paying most of the bills.

You also want them to have enough money to help them raise the children and do other things. And this is one of the main reasons why people take life insurance and name their spouse as the primary beneficiary.

But what happens in case of things change? What happens in case you divorce?

In the case of divorce, it means that very few people will have a reason to have their ex-spouse as the beneficiary. Upon a divorce, you will always have things that can happen.

One of them is that you can change the beneficiary, and another one is that you may not be able to change the beneficiary.

Changing Beneficiary upon a Divorce

Changing your beneficiary is one of the things you can do in case you have a divorce with your spouse. That is if you no longer want your ex-spouse to take the benefits.

However, the process is not as simple as it may sound. First, you must be operating in a revocable beneficiary program. When you are indicating the beneficiaries of your benefits in most cases, insurance companies allow you to choose between a revocable and irrevocable beneficiary.

When you confirm that you have a revocable beneficiary, the next thing is to contact your life insurance agent. A life insurance agent is the best person to work with whenever you want to change your beneficiary since they know more about how to go about the whole process.

Your life insurance agent will help you to change your beneficiary. However, you can contact directly with the insurer.

Irrevocable Beneficiary

Can you change a beneficiary when you have an irrevocable beneficiary?

No! At this point, you are out of option.

Having an irrevocable beneficiary means he/she will remain your permanent beneficiary.

So, in case of a divorce, you will have to make peace with yourself that there is nothing you can do about it. Your ex-spouse will continue being the beneficiary.

Spouse as a Secondary Beneficiary

Yes, your spouse can be a secondary life insurance beneficiary.

This is why you name the primary beneficiary, and in case the primary beneficiary is deceased at the time of the beneficiaries, then the secondary beneficiary will take the benefits.

However, in such cases, you are also in a position to change the beneficiary. In case you had named your spouse as your beneficiary and you have divorced, then you are free to make changes.

All you have to do is make sure that you talk to your life insurance agent and follow the necessary procedures.

Special Rules in the Certain States

There are special rules that you will find, especially in some states in the US. Such rules will work differently when it comes to benefits.

Such states include:

  • Idaho
  • Nevada
  • New Mexico
  • Arizona
  • Louisiana
  • California
  • Washington
  • Texas
  • Wisconsin

In the above states, marital asset equity rules govern life insurance benefits as well. As the property acquired by a couple during marriage is divided 50/50 upon divorce, so are the death benefits of life insurance.

The only way one can avoid this is in case a spouse agrees to sign a waiver rights agreement to such circumstances.

The Bottom Line

The rules of life insurance benefits for a spouse can be complicated for many people. Some people will end up knowing about such regulations when it is too late.

For example; you end up forgetting to change your beneficiary in case you divorce your spouse. In those cases, the benefits may go to the person you never intended.

When you are taking a life insurance policy always think clearly when deciding who to name as the beneficiary. It is also essential to make sure that you understand the rules stipulated by the insurance company on the same.

Linda Chavez

I'm a burial & senior life insurance expert, independent agent, Founder & CEO of Seniors Life Insurance Finder. I have been working in this sector since 2004 and established my own company in 2014. I have a team of seven members, and we are trying hard to share the knowledge we've gathered. We know how difficult often it is to find an affordable policy. Hence, we are doing our best to help you.