Can an insurance company makeyou pay back money that itmistakenly paid out on a claim if you did nothing wrong?

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Can an insurance company makeyou pay back money that itmistakenly paid out on a claim if you did nothing wrong?

My father pasted away 6 month ago and my brothers and I found a life insurance policy that he had through an account with a local credit union. We applied for the claim and were told that his ex-wife was listed as the beneficiary by the claim processor. The claim processor said that through information found by his legal team if we provided a copy of the divorce decree then we, his heirs, would receive the insurance. We provided it and they paid us 3 our equally over 2 months ago. I just got a letter in the mail from the insurer saying they made a mistake and are requesting we send the money back.

Asked on September 1, 2011 Missouri

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If you are not entitled to the money, then you must return it--even if you did nothing wrong and the error was on the insurer's part, an error does not create an entitlement or right to the money. So yes, if this was an error, you would have to return it, though if you have suffered any losses because of their error (e.g. you bought property which you cannot now afford to keep up), you may be entitled to compensation for the loss you suffered do to the insurer's mistake. You also don't have to simply accept their word for--ask them "why" you need to return the money (i.e. what was the mistake) and if you disagree with it, you might hire an attorney to challenge their detemination. Note that if the policy had named the ex-wife by name, then she would still be the beneficiary--a designation of someone by name has to be specifically changed or revoked. If she were described as his "wife," then once she is no longer the wife, she would not be entitled.


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