Divorce cancels ex-spouse rights to death benefits in Illinois

It makes no difference if the coverage is term life or other life insurance plans, insureds should update their beneficiaries after divorces. Under  Illinois state law (750 ILCS 5/503 (b-5)(1)):,

(1) As to any existing policy of life insurance insuring the life of either spouse, or any interest in such policy, that constitutes marital property, whether whole life, term life, group term life, universal life, or other form of life insurance policy, and whether or not the value is ascertainable, the court shall allocate ownership, death benefits or the right to assign death benefits, and the obligation for premium payments, if any, equitably between the parties at the time of the judgment for dissolution or declaration of invalidity of marriage. (2) If a judgment of dissolution of marriage is entered after an insured has designated the insured’s spouse as a beneficiary under a life insurance policy in force at the time of entry, the designation of the insured’s former spouse as beneficiary is not effective unless: (A) the judgment designates the insured’s former

spouse as the beneficiary;

(B) the insured redesignates the former spouse as the

beneficiary after entry of the judgment; or

(C) the former spouse is designated to receive the

proceeds in trust for, on behalf of, or for the benefit of a child or a dependent of either former spouse.

(3) If a designation is not effective under paragraph (2), the proceeds of the policy are payable to the named alternative beneficiary or, if there is not a named alternative beneficiary, to the estate of the insured. (4) An insurer that pays the proceeds of a life insurance policy to the beneficiary under a designation that is not effective under paragraph (2) is liable for payment of the proceeds to the person or estate provided by paragraph (3) only if: (A) before payment of the proceeds to the designated

beneficiary, the insurer receives written notice at the home office of the insurer from an interested person that the designation is not effective under paragraph (2); and

(B) the insurer has not filed an interpleader. (5) The provisions in paragraphs (2), (3) and (4) of this subsection (b-5) do not apply to life insurance policies subject to regulation under the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. 100 et seq., the Federal Employee Group Life Insurance Act, 5 U.S.C. 8701 et seq., or any other federal law that preempts the application of those paragraphs.