Summary
Under Florida law, an insured must strictly comply with a life insurance policy’s terms to change a beneficiary, and a clause allowing the insurer to take “other action” before recording a change imposes an objectively reasonable standard. The Eleventh Circuit held that the insurer’s response—identifying defects in the beneficiary-change request and providing a form to cure them—was objectively reasonable, and the insured’s failure to respond meant he did not strictly comply, so the attempted change was ineffective. The court affirmed summary judgment for the original beneficiary in this interpleader action.
Topics
Practice areas
Questions Presented
- Whether the decedent strictly complied with the policy terms to effectuate a change in beneficiary designation.
- Whether American General's actions in response to the defective beneficiary request were objectively reasonable under the policy's 'other action' clause.
Key quotations
“Under Florida law, an insured's right to change the beneficiary of a life insurance policy depends on the terms of the policy. McDaniel v. Liberty Nat'l Life Ins., 722 So.2d 865, 866 (Fla. Dist. Ct. App. 1998). The insured must strictly comply with the terms of the policy to effectuate a change in the beneficiary. Id. The doctrine of strict compliance exists to protect the insurer, and only the insurer may waive it. Miller v. Gulf Life Ins., 12 So.2d 127, 130 (Fla. 1942).” (at 5)
“Florida law requires that we read the phrase 'subject to any payment we make or other action we take before recording' 'as creating some objectively reasonable standard.' See O'Brien, 44 So.3d at 1278-79 (interpreting the similar phrase 'Your request must be in writing and in a form that meets our needs'). In other words, any such 'other action' must be 'objectively reasonable.' This reading allows the insurer to protect itself from liability when faced with a defective beneficiary request.” (at 5-6)
Factual background
In 2003, decedent Dev-Anand Maharajh purchased a one-million-dollar life insurance policy from American General, naming his then-wife Jennifer as primary beneficiary and any children born to that marriage as contingent beneficiaries. In July 2008, during divorce proceedings, he designated his daughter O.H.M. as 100% beneficiary with Jennifer as trustee. After marrying Lisa in 2009, he submitted a request to change beneficiaries to 75% Lisa and 25% O.H.M., with contingent beneficiaries split between O.H.M. and Lisa's child. American General sent a letter stating the request was defective, identifying specific issues, and enclosed a blank change form and instructions. The decedent never responded. He died in April 2020, having paid all premiums.
Procedural history
American General Life Insurance Company filed an interpleader complaint due to uncertainty over the proper beneficiary of a life insurance policy after the insured's death. O.H.M. moved for summary judgment. The district court granted O.H.M.'s motion and entered judgment in her favor, finding that the decedent had not strictly complied with the policy terms to change the beneficiary. Lisa Maharajh, the decedent's widow and the intended new beneficiary, appealed.