Decision Affirmed in Granting Life Insurance Benefits to Sister Instead of Ex-Wife.

Position::BENEFICIARY DESIGNATION
 
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The Seventh Circuit Court of Appeals affirms the district court decision finding that the decedent's sister, not the decedent's ex-wife, is the proper life insurance beneficiary.

The plaintiff is the sister of a deceased employee who had two life insurance policies through his employer. The defendant is the ex-wife of the deceased employee.

The deceased employee had both a basic and supplemental life insurance policy under an employer-provided welfare benefit plan. The employee listed the plaintiff as the sole and primary beneficiary of both policies. After the employee died, the defendant ex-wife claimed that she and the employee's child were entitled to the supplemental life insurance benefits despite the plaintiff being named as the beneficiary.

The Employee Retirement Income Security Act of 1974 (ERISA) requires administrators of employee benefits plans to comply with the documents that control the plans. For purposes of a life insurance policy, death benefits are paid to the beneficiary designated in the policy, regardless of whether another person asserts any other claims or arguments. The district court granted summary judgment for the plaintiff, finding that the supplemental life insurance policy was covered by ERISA and, therefore, the defendant's arguments of entitlement to those benefits fail. The court now reviews the district court decision.

The court notes that there are five elements that must be shown for ERISA to cover an employee welfare plan like an insurance plan: (1) a plan, fund or program; (2) established or maintained; (3) by an employer, by an employee organization or by both; (4) for the purpose of providing medical, surgical, hospital care, sickness, accident, disability, death, unemployment or vacation benefits, apprenticeship or other training programs, day-care centers, scholarship funds, prepaid legal services or severance benefits; and (5) to participants or their beneficiaries. The court finds that all of these elements are satisfied in this case.

ERISA excludes from coverage certain group insurance programs that meet specific safe...

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