Life Insurance Claim Denied Due to Beneficiary Designation Flaw
Minnesota Life Insurance company is the plan provider for the Mississippi State and Schools Employee’s Life Insurance Plan. An employee of the State, a school teacher, had been enrolled in the life insurance policy for well over a decade. When she originally enrolled in the coverage the paperwork was done by hand. For her beneficiary, the teacher named her sister. This is how the beneficiary designation stayed, until Minnesota Life Insurance Company decided to roll-out a computer-based employee benefits management system.
This new system did not change the life insurance benefits that were already in place, except for one very important provision. The new system required the insured to re-state the beneficiary of their life insurance policy. The announcement from the State of Mississippi, Office of Finance and Administration stated,
“We are very excited about this new online option and encourage you to visit the myBlue site today to start the process of designating your life insurance beneficiary”.
The announcement appeared to be directed to someone who had not already made a beneficiary designation — not someone who had maintained the same beneficiary for many years,
The announcement went on to state,
“Please note that if you do not execute the new beneficiary designation, any resulting life insurance proceeds will be paid according to the defaults described in the policy, which may not necessarily be according to your wishes”.
When this women died her sister applied for the death benefit. The claim was denied. Minnesota Life Insurance Company based their denial on the premise the insured did not re-state her beneficiary designation and so the plan default designation applied. The plan default, in this instance, would have paid the claim to her mother — who was not able to make competent decisions.
We argued that the beneficiary designation, once made, stays in place unless actively changed by the insured. We also argued that the announcement to re-state a beneficiary was not properly delivered and there was no proof that it was ever received by the employee.
Thankfully, all parties agreed with these arguments and cool heads prevailed. The surviving sister did receive the life insurance claim benefits — as was always the intent of her loving sister.
Life Insurance Claim Denied Due to Beneficiary.