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Dear Insurance Adviser,
My husband was named a beneficiary of his brother-in-law’s life insurance. My husband’s sister and her husband (the brother-in-law) had made each other the beneficiary on their life insurance policies, with my husband secondary in the event either of them died. The sister died in 2013 and the brother-in-law died in June 2015. Now, their daughter is claiming that she should have been the sole beneficiary on her dad’s policy. Does she have a legal claim to the benefit?
— Ramona

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Dear Ramona,
No, their daughter has no legal claim to the benefits. As long as there is a surviving beneficiary, a life insurance death benefit is paid to the primary beneficiary first. If that person is deceased and if the secondary or contingent beneficiary named on the policy is still alive, the death benefit is then paid to that secondary beneficiary.

End of story. No contest. That is the legal answer to your question.

The next question to ask is: Why was your husband, rather than their daughter, named as the secondary beneficiary? Perhaps the couple had a falling out with her. Or perhaps when they applied for the policy, their daughter was not yet born or was too young to receive the benefits legally, without supervision. Normally in that case, the secondary/contingent beneficiary would be the same person who was named in the parents’ will to raise their daughter. Was that you or your husband? In that case, your husband would receive the death benefit to be used in trust for their daughter.

When one has children and names a secondary life insurance beneficiary other than their child, that secondary party is the person whom the insured trusts to make sure the money is used to help the child rather than for the beneficiary’s own personal gain.

There’s some food for thought. I hope it helps.

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