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Insurance Carrier: Minnesota Life
My mom died. Her life insurance policy was unclear as to the primary and secondary beneficiary. The designation form was witnessed by the company rep. There is dispute as to whether me or my uncle are the primary beneficiary. The company has asked and continues to ask that my uncle and I negotiate an agreement as to how we can split the proceeds. This has caused a complete break in our relationship to this point and no compromise can be reached. The company lawyer keeps asking me to be in contact with my uncle even though I have strongly asked that I not be put in such an untenable position. The alternative we are given is for the company to file an interpleader.
My question is whether or not this conduct on the part of the agency violates ethics standards or the law. Is it not the responsibility of the company to determine the facts and pay the proceeds? The company lawyer keeps telling me that he is concerned that by doing so his company is at risk of being sued. I feel trapped.
Insurance Expert Answer:
The insurance company is acting properly. When the situation is ambiguous and contesting claims were made or are likely, and the two claimants can't agree on an equitable disposition of the proceeds, the companies deposit the proceeds in court and allow the court to decide which of the claimants is the legal beneficiary. Here you recognize the beneficiary is unclear.
Why don't you settle this with your uncle? Or do a coin flip? Or agree to go to arbitration or mediation with him? The legal bills could wipe out the proceeds if you guys insist on all or none and that's nuts.
Some issues that would be relevant to me as an arbitrator-- When was the policy purchased? Who paid the premium? What else did uncle get from your mother? Was she supporting him? Vice versa? Why does he think he's entitled to anything? Do you have any siblings? Did they get named as beneficiaries under the Will or anything else? Did uncle get named? How did he know about the policy? How did you? What did the agent recall? Was there any reason an arbitrator might think you or your uncle were on the outs with your mother or family?