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Can a QDRO apply to a Group Life Insurance Claim?

The short answer is yes, a qualified domestic relations order, or “QDRO,” can apply to an employer-issued benefit plan including life insurance claims.

A QDRO is commonly used to divide retirement plan benefits between a plan participant and another named payee, such as an ex-spouse or minor child. Unfortunately, not all plan administrators responsible for deciding who should receive benefits are aware that a QDRO can also apply to life insurance claims under the Employee Retirement Income Security Act of 1974 (“ERISA”).

Take for example:

A divorce decree states that the husband will name his ex-wife as a beneficiary of his employer-sponsored life insurance during the time period which she is entitled to marital support payments. Husband then remarries, and designates his new spouse as a beneficiary of his group life insurance policy, but he dies while his ex-wife is still entitled to marital support payments.

If both ex-wife and current wife submit claims for the life insurance proceeds, the plan administrator could easily tell the life insurance carrier to pay the proceeds to the named beneficiary, the current spouse in this example, as the beneficiary designation generally is controlling under ERISA. However, some courts have ruled that a divorce decree qualifies as a QDRO if it clearly specifies the following four items.

  1. The name and mailing address of each of the participant and the alternate payee.

This information can usually be determined from the divorce decree or from the employer’s records.

       2. The amount or percentage of the benefit to be paid to each alternate payee.

The divorce decree will typically include the amount to be paid to the alternate payee, such as “all employer-provided life insurance” or “two-thirds of the life insurance proceeds to the minor children”. In the case of multiple alternate payees, the court will typically interpret the decree as providing for equal distribution among the alternate payees.

      3. The number of payments or period to which the order applies.

Since a life insurance benefit is usually paid in one lump sum, courts have not required any greater degree of specificity. However, the order should specify the time period during which the required benefit designation is in effect, such as, while the minor child is age 18 or younger, or during the period in which marital support payments are received.

      4. Each plan to which the order applies.

While a QDRO for a pension plan generally identifies the specific name of the plan, such as the “ABC Company Retirement Savings Plan”, courts have required far less specificity for life insurance benefits. For example:

                a. “[Participant’s] insurance through [name of insurance company], maintained at his/her place of employment”.

                b. “All employer provided life insurance.”

                c. “All life insurance policies.”

Life insurance proceeds are typically paid by the life insurance carrier and not the employer. However, many issues involving who should receive the proceeds may arise if the employer and plan administrator fail to share, review, and correctly interpret the relevant documents.

Our Lawyers Specialize in Life Insurance Claims

Because our law firm has always focused on insurance benefits, our lawyers are experts in legal representation for life insurance benefits.

That means our lawyers have:

  1. Won several major lawsuits that help make better law for insurance benefits claimants;
  2. Experience fighting every major insurance company, such as UNUM, Hartford, MetLife, CIGNA, Prudential, and more.
  3. Successfully represented hundreds of clients and won millions of dollars in insurance benefits.

Because federal law applies to most life insurance claims, we can help clients across the country.

Life insurance companies have lawyers. You should too. Call Dabdoub Law Firm to get experienced lawyers on your side.

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