If you are divorced or divorcing, it is vitally important that you review and update the designated beneficiaries for your life insurance (as well as other accounts).  Failing to do so may have drastic consequences for your loved ones.

This week, I spoke to a woman who just lost her husband and then found out that he may not have updated his life insurance beneficiary designation.  The life insurance was purchased during the husband’s first marriage, and it seems that his first wife may still be the designated beneficiary.  Unfortunately, the surviving spouse may not get any part of the life insurance death benefits.

Under Florida law, when a married couple divorces, it is presumed that the divorced spouses are not included in each others will, even if they forget to update their wills.  The same savings law does not exist when it comes to life insurance beneficiary designations.  It’s up to divorced spouses to take affirmative steps to update the beneficiaries of their life insurance.  In fact, the Florida Supreme Court explained that, absent undue influence or the like, insurance companies must be able to pay death benefits to the people named as beneficiaries, or else the insurance companies would be in difficult situation of deciding if failure to change the beneficiaries was intentional or not.  Forgetting to update life insurance beneficiaries can have drastic consequences.

All is not lost for the surviving spouse with whom I spoke, however.  Her deceased husband’s life insurance policy was a whole life policy.  Under Florida’s elective share statutes, the surviving spouse may be entitled to up to 30% of the cash surrender value of the policy immediately prior to the husband’s death.  It’s a far cry from the death benefits, but at least it’s something.