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Who receives life insurance benefits after a divorce?

Most people in Pennsylvania with life insurance policies have a beneficiary named on these assets, often their spouse, who will receive the benefits should the policyholder pass away. Many people name a beneficiary, but soon after do not give it a second thought. However, there is one time where it is wise to review one's beneficiary designation: when one divorces.

If a person named their spouse as a beneficiary to a life insurance policy, but does not update it to remove their ex-spouse as a beneficiary following a divorce, it can cause legal trouble. After all, most people do not want their ex-spouse to receive their life insurance proceeds after their death. But, the Supreme Court has addressed this situation in 2018, issuing a ruling that protects the interests of the policyholder.

In this ruling, the Supreme Court determined that life a person's life insurance benefits will not go to an ex-spouse, even if the ex-spouse is still named as the beneficiary on the policy. Instead, the contingent beneficiaries (in this case, the deceased's children) will receive the life insurance benefits after a divorce.

The state in this case (Minnesota) had a law on the books stating that if a spouse is named as a beneficiary on a non-probate asset, including life insurance policies, and the policyholder divorces, the policyholder's ex-spouse will automatically be removed as the primary beneficiary on the life insurance policy, and the benefits will be granted to the named contingent beneficiary. The Supreme Court held that this statute was constitutional. Pennsylvania has a similar law in place.

Despite this ruling, much time, money and trouble can be saved if a policyholder simply changes beneficiaries to their life insurance policy following a divorce. Most people when they obtain the life insurance policy do not anticipate that divorce is in their future. Unless it is clearly stated otherwise though, it may be safe to assume that they do not want their ex to receive the benefits should they divorce. By changing their beneficiaries following a divorce, the policyholder can ensure their wishes will be met.

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