Life insurance beneficiary battle pits man's sister against his estranged wife

Jack HungelmannDear Insurance Adviser,
My husband recently passed away. We had been separated and living apart for the past few years due to financial reasons. Upon his death, his sister made it clear to me that he named her as the beneficiary of his life insurance when he started a new job this year. I accepted that fact. But I just received information from the insurance company that although he named his sister on an additional plan at his job, he did not name anyone on his basic life -- so it defaults to me. This may have been a human resources error, but the insurance company says that by law, since I am his next of kin (legal wife), I will receive the proceeds. My question is: Can his sister try to sue me for the funds if I use them to pay his medical bills, expenses, etc.?
-- Debbie

Wife sitting alone at table | mother image/DigitalVision/Getty Images

mother image/DigitalVision/Getty Images

Dear Debbie,
Of course his sister can sue you. Anyone can sue for anything these days. The real question is if she does sue you, how successful will she be? Not very.

There is no negligence on your part. If anyone was negligent, it was your husband, who failed to name a beneficiary when he completed the life insurance application.

If anyone can be sued, it might be the human resources people for not making sure that a beneficiary was named on your husband's group insurance application.

It's very thoughtful of you to want to use the money to pay his medical bills, expenses, etc. But that's not a requirement. You can use the money for anything you want. You can take a Hawaiian vacation if you like.

Unfortunately, not naming a designated beneficiary on group life insurance is fairly common. Even more common is failing to name a secondary or contingent beneficiary in the event that the primary beneficiary dies before the insured person.

Good luck.

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