True Story: Mom has to give 20 year old son’s life insurance payment to an “Exotic Dancer”
There is an old joke about the evangelist who went into a bar and loudly asked “Does anybody want to go to heaven?” nobody responded and he then asked “Nobody wants to go to heaven some day?” One patron responded “Someday, yes Padre, we thought you meant right now!”
In employee meetings, where we are going over what the benefits are (your broker does this doesn’t he?), we make a big deal about beneficiary statements and the need to keep them updated.
While a person may leave life insurance proceeds to pretty much anybody they want, very few people understand the ramifications of that action. And very few people remember to change the beneficiary if they have a life change – or just change their mind.
Take for example Crites v. Anthem Life Ins. Co., 2014-Ohio-1682 (Ohio Ct. App. 2014) in which Crites remarried and then did not change the beneficiary on the group life. When he died the X-wife claimed the proceeds even though he had a separate agreement regarding the life insurance with the new wife. (This is an interesting case for HR people to review http://www.erisapracticecenter.com/2014/04/28/ohio-court-of-appeals-upholds-constructive-trust-in-favor-of-unnamed-beneficiaries/)
The beneficiary statement is a really big deal and HR departments should mention it when employees make changes to other benefits that might indicate serious family status changes. Divorce would be obvious but there are other less obvious indicators that the HR person might become aware of and want to mention the life insurance beneficiary.
So back to the Exotic dancer. A 20 year old construction worker fell “in love” with a woman he had occasion to spend time with at a local “dance club?”. He felt compelled to change the beneficiary statement to make payment to the dancer. A few weeks later the dancer moved to Nevada and the romance was over – BUT – the son never changed the beneficiary back to his Mom. When he was killed in an accident the proceeds (Double benefits as it was an accidental death) went to the dancer. I had to break the news to the mother who was not aware of this change.
Employees also need to be aware about leaving Life insurance proceeds to minor children, pet snakes, charities, and other beneficiaries. There is great value in wills and living trusts and most employees will not consider these unless somebody tells them and make the services available.
Like the men in the bar, we all know we will pass on someday, but none of us expects it to be tomorrow. The beneficiary statement dictates payment if it is in 20 years or tomorrow, so it needs to be kept up to date with what you really want to happen.
For more information, contact Bill Weaver, 602-391-8800!