Strict Compliance Required to Change Insurance Beneficiary

Elder Law Answers case summary.The United States Court of Appeals for the Eleventh Circuit holds that a man failed to change the beneficiary of his life insurance policy because he did not strictly comply with the company’s rules, ignoring their notice to resolve issues with his request. In American General Life Insurance Company v. O.H.M. (11th Cir. No. 22-10220, Sep 6, 2023).

Dev-Anand Maharajh purchased a life insurance policy with American General and named his then-wife as the beneficiary and any children born into the marriage as contingent beneficiaries. While his divorce was pending, he changed the sole primary beneficiary to his daughter and added his soon-to-be-ex-spouse as the trustee for their daughter under the beneficiary clause.

After he remarried, he requested to modify his beneficiary designations again. He sought to put his new wife as a 75 percent primary beneficiary and his daughter as a 25 percent primary beneficiary. He also aimed to have his daughter and his new wife’s child from a previous relationship as 50 percent contingent beneficiaries.

American General sent a letter to Mr. Maharajh stating that it was unable to make those changes until two issues were resolved. The letter indicated that separate parties should be primary and remainder beneficiaries and that the insurance company needed to know Mr. Maharajh’s relationship to the new successor beneficiary, his second wife’s daughter. Ten years passed. He never responded and ultimately passed away.

As trustee for her daughter, the first wife brought a claimant statement. So did the second wife. The insurance company filed a complaint for interpleader relief because it was unsure who should receive the policy. The district court found that the daughter was entitled to the policy, and the second wife appealed.

When it sent the letter to Mr. Maharajh asking for more information, the insurance company acted reasonably. Individuals must strictly comply with insurance companies’ rules when changing beneficiaries. This protects the insured from ambiguous results, such as the company giving the policy to the wrong person. Here, the insured failed to strictly comply with the policy because he never responded to the notice or asked about the status of his request in the following 10 years.

Contrary to the second wife’s demands, American General cannot change the beneficiary now. Only the policy’s owner can change it, and he is dead.

Because the insured failed to strictly comply with the policy’s terms, the appellate court affirms the lower court’s decision to give the policy to his daughter, excluding his spouse.

Read the full opinion.