Top 3 Mistakes People Make in Life Insurance Beneficiary Disputes
Top 3 Mistakes People Make in Life Insurance Beneficiary Disputes
When a loved one passes away and there’s a life insurance policy involved, things should be simple. But often, they’re not. Conflicting beneficiary designations, last-minute changes, or unclear marital relationships can spark full-blown legal disputes—especially when large sums of money are on the line.
As a Texas attorney who has handled life insurance beneficiary disputes and interpleader lawsuits for over a decade, I’ve seen the same critical mistakes again and again. Here are the top three errors people make that can cost them everything:
❌ 1. Doing Nothing — And Losing by Default
When people are served in an interpleader lawsuit or notified of a competing claim, some freeze. Maybe they don’t want to spend the money on a lawyer. Maybe they think it will just “work itself out.” Or maybe they don’t realize what’s at stake until it’s too late.
I’ve seen it happen: a person with a valid claim does nothing, and the court simply awards the life insurance proceeds to the other side by default. This isn’t rare. It’s devastating—and completely avoidable.
👉 Bottom line: If you’ve been served, you must act quickly. You may only have a few weeks to file an answer and assert your rights.
❌ 2. Hiring the Wrong Lawyer
Life insurance disputes are not like routine probate cases or divorces. They often involve:
Complicated beneficiary designations
Competing claims from spouses, ex-spouses, or common-law partners
Federal vs. state law issues
Interpleader procedures in federal court
This is a specialized area of law. I’ve seen litigants represented by capable lawyers—just not capable in this niche—lose ground quickly. Missteps in jurisdiction, ERISA analysis, or evidentiary issues can do lasting damage.
👉 Hire an attorney who regularly handles life insurance disputes and interpleader lawsuits, not just someone who occasionally dabbles in probate.
❌ 3. Misunderstanding State vs. Federal Law
This one trips up even experienced lawyers.
Some life insurance policies are governed by Texas state law, which provides protections for spouses and community property rights. But others are governed by federal law, such as:
ERISA (Employee Retirement Income Security Act)
FEGLI (Federal Employees’ Group Life Insurance)
SGLI/VGLI (for military service members)
In many federal cases, the beneficiary designation controls—even if it conflicts with a divorce decree or community property rights. Courts have repeatedly enforced beneficiary forms that would have been invalid under Texas law.
👉 Understanding which law applies is often the key to winning or losing your case.
Experience Matters
I’ve represented clients across Texas in life insurance disputes involving:
Divorced spouses
Common-law marriage claims
Competing children and partners
Accusations under the Texas Slayer Statute
Conflicting or missing beneficiary forms
Interpleaders in both federal and state court
Whether you’re just starting to explore a claim or you’ve been served in an interpleader suit, it’s crucial to understand your legal position early and avoid mistakes that could cost you the full value of the policy.