Much to your surprise, you find out that someone else is the beneficiary on your spouse's life insurance policy.
As a husband or wife, don't you have an automatic right to the life insurance money?
It's a tricky question, and the answer is: It depends.
Generally, the policy owner - who is also usually the person who pays the premiums -- can name anyone he or she chooses as beneficiary.Besides naming a spouse as beneficiary, a policyholder could choose another family member, such as an adult child, a business partner, or even a boyfriend or girlfriend outside the marriage. Insurance companies don't make moral judgments about who is named as beneficiary. They simply pay out the money when the beneficiary submits a claim. "Life insurance is a contract between the owner of the policy and the insurance carrier," says Donald Goldberg, division vice president of AEPG Wealth Strategies in Warren, N.J.
Community property statesUsually a spouse doesn't have any right to claim the life insurance money if someone else is named as beneficiary -- except in a community property state. Those states are:
- New Mexico