What a treat to read a life insurance case decided by the U.S. Supreme Court! The high court resolved a question under the Federal Employee’s Group Life Insurance Act (FEGLIA) that placed Virginia state law in conflict with the Federal statute. FEGLIA is a federal program that provides federal employees with group life insurance, and like other life insurance, the employee must name a beneficiary to receive the death benefit. Under FEGLIA, the named beneficiary is the only valid recipient of the policy proceeds.
In Hillman v. Maretta, the decedent identified his wife as beneficiary of $125,000 in life insurance proceeds. He divorced and later married Hillman but never changed the beneficiary designation. After his death, Virginia state law required the proceeds to be paid to Hillman because of the divorce, but the administrator of the policy paid the proceeds to the ex-wife.
Ultimately, the Supreme Court stated that regardless what the state law said, the law under FEGLIA prevailed, and the ex-wife correctly received the death benefit. Writing for the majority, Justice Sotomayor stated “where a beneficiary has been duly named, the insurance proceeds she is owed under FEGLIA cannot be allocated to another person by operation of state law.”
The lesson here is in order to avoid giving an “ex” a windfall, make sure you change your life insurance beneficiary designations. Do it in writing and in accordance with the policy’s requirements.
Hillman v. Maretta, U.S. Supreme Court, June 3, 2013
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