What would you do if 10 years after receiving a life insurance bequest, the insurance company asked for the money back claiming it had made a mistake? The town of Snowflake, Arizona is currently facing that dilemma.
In 2005, Snowflake, Arizona received a life insurance payout of approximately $73,000. The holder of the policy had been a former employee of the town and it was probably presumed at the time that he wished to give something back to it.
Recently, however, First Colony Life Insurance asked the town to return the money.
It seems the insurance company claims that a mistake was made and the town never should have been listed as a beneficiary on the policy. Before making a decision about what to do, the town is looking into the matter.
Naturally, the council would like to know why the company believes a mistake was made and whether the town has a legal obligation to return the money.
The Arizona Journal reported the story in an article titled "Bequest To Town Was Made In Error, Says Insurer."
This is an unusual case and it is impossible to speculate on what might happen. To date, the insurance company has not released details about what happened and why it believes a mistake was made.
Nevertheless, when you are creating an estate plan it is very important that any life insurance policies you have state clearly who the beneficiaries are.
The clearer your policy is, the less likely it is that mistakes will happen.
It would be disastrous if you use life insurance to balance your estate between relatives and the money does not go to the proper beneficiary.
Part of our planning process is ensuring that your wishes are crystal clear. If you would like more information on planning, please visit my website.
Reference: Arizona Journal (May 20, 2015) "Bequest To Town Was Made In Error, Says Insurer."