The Insurance Company Said the Divorce Ended Her Claim

He bought the policy while they were married and named his wife as the sole primary beneficiary. There was no contingent beneficiary. The death benefit was more than half a million dollars.

They divorced in May 2024. He died in September, less than four months later. He never changed the beneficiary form.

The insurance company sent the file to its own law department and came back with an answer. Texas has a statute that automatically revokes an ex-spouse’s beneficiary designation when a marriage ends, unless the decree says otherwise, or the insured re-designated the ex-spouse after the divorce, or the designation was for the benefit of a dependent. None of those applied. So the designation was void, and because no contingent beneficiary had ever been named, the money belonged to the estate.

His ex-wife was told she would not be paid.

Michael Young represented her.

What decided it

The carrier’s reading of the statute was correct as far as it went. The question it had not asked was what kind of policy this was.

It was not a policy he had bought off the shelf. It was coverage he got through his job, part of an executive group life insurance plan his employer offered to management. The employer had approved the plan’s terms. The benefit amount was tied to the employee’s base salary and to his continued eligibility for employment. The employer had begun ERISA reporting compliance on the plan two years before he died.

That makes it an employee benefit plan governed by ERISA, and ERISA displaces the Texas revocation statute. Under a federal plan the money goes to the person the participant designated. She was the person he designated, and she was still designated on the day he died.

The way we learned that is the part worth repeating. The client called her ex-husband’s HR department and asked for the plan documents. She had the answer within a few days. Neither the insurance company nor its law department appears to have made that call before deciding the claim.

Two backup arguments went into the same letter. He had never disclosed the policy in the mediated settlement agreement incorporated into the divorce decree, and the decree gave the injured spouse a claim to any asset that went undisclosed. And the policy was acquired during the marriage, which gave her a community property interest in the proceeds if Texas law applied after all. If the carrier disagreed on ERISA, it still had a problem.

The letter went out by email and certified mail in mid-November, addressed to the claims consultant. It set out the plan facts, the federal rule, the two backup positions, and told the company that if it would not pay, it should file an interpleader in the Eastern District of Texas.

The result

Roughly two weeks later the insurance company sent over a claim form to be completed by our client. It was returned two days after that. The company paid $538,000.

No lawsuit. No interpleader. About three weeks from letter to reversal. The case was handled on a contingency fee.

A divorce does not automatically end a beneficiary claim

Whether a divorce wipes out a beneficiary designation in Texas depends on something most people never think to ask: where did the policy come from.

If it is coverage through an employer, it is usually governed by federal law, and the Texas revocation statute does not touch it. The plan pays the form. If it is a policy the insured bought on his own, the Texas statute generally does apply, but it has real exceptions, and one of them is a divorce decree that says something different.

Insurance companies do not always sort out which kind of policy they are looking at before they answer. In this case the fact that decided everything was sitting with an HR representative who would have handed it over to anyone who asked.

If you have been told you cannot collect on a Texas policy because you and the insured were divorced, do not accept that as the end of it. Find out how the policy was obtained, who paid the premiums, and whether the employer had any role in it. Those answers change the law that applies, and the law that applies changes the outcome.