For insurance, only signed forms count

A recent court case illustrated the importance of making sure that you have properly designated the beneficiaries of your life insurance policy. The case involved a deceased U.S. Postal Service employee whose family members fought over who was entitled to his life insurance.

Former USPS employee Pink Kirksey was covered by a life insurance policy issued by the Metropolitan Life Insurance Co. (MetLife) under the Federal Employees' Group Life Insurance Act. FEGLIA, designed to provide a low-cost group life insurance program for federal employees, is administered and regulated by the Office of Personnel Management to purchase master policies from private life insurance companies.

On Oct. 12, 1978, Kirksey submitted a "designation of beneficiary" form to USPS designating his wife, Maude Kirksey, as the beneficiary of his life insurance policy. In June 1989, Maude Kirksey died. Pink Kirksey died in September 1995, and his daughter, Charlene Hightower, two months later went to the Circuit Court of Cook County, Ill., to obtain the proceeds of her father's policy. Kirksey's sister, Lessie Kirksey, also wanted the proceeds from the life insurance policy, creating a family feud.

According to FEGLIA, if the designated beneficiary of an insurance policy dies and the insured individual fails to name another beneficiary, the proceeds of the insurance policy go to the insured's widow and children. In this case, because Pink Kirksey had no widow, the proceeds were to revert to his daughter. But before his death, Kirksey apparently told some people that he wanted his sister to be the beneficiary of his life insurance policy, and he filled out a designation of beneficiary form but never signed it.

In November 1996, Hightower filed a petition for declaratory judgment to force MetLife to pay the insurance proceeds to her. The two members of Kirksey's family did not dispute the facts of the case and agreed that it was limited to the issue of whether Pink Kirksey's signature was required on a designation of beneficiary form in order to designate his sister as his beneficiary.

Lessie Kirksey argued that the form designating her as the beneficiary should be considered valid. In support of her argument, she submitted affidavits from the two witnesses who were present when her brother filled out the form which was intended to designate his sister as his beneficiary.

But on July 16, 1997, the judge ruled in favor of Hightower that the law clearly stipulated that Pink Kirksey's signature had to be on the beneficiary designation forms, regardless of Kirksey's intent. Lessie Kirksey appealed the decision, specifically disputing the court's decision not to consider extrinsic evidence relating to Pink Kirksey's intent.

This would appear to be an open-and-shut case. The law states that life insurance benefits will be paid to the beneficiary designated by the employee "in a signed and witnessed writing" and that any designation of a beneficiary not performed in such a manner "has no force or effect." However, Lessie Kirksey argued that a previous version of the law read differently. She argued that when Congress amended that version, it did not intend to alter the provisions pertaining to designating a beneficiary. Her argument was that the old law, which did not insist on a signed designation, still prevailed.

Court Takes Different Tack

The court disagreed with this interpretation (Charlene C. Hightower v. Lessie Kirksey & Metropolitan Life Insurance; United States Court of Appeals for the 7th Circuit; Case No. 97-3087; Oct. 8, 1998). For starters, Congress did not simply renumber the sections of FEGLIA when it changed the law. Congress specifically added the words "signed and witnessed" to describe FEGLIA's beneficiary designation requirements. In addition, Congress tried to make the requirement clear and unambiguous by adding language that any designations "not so executed and filed [had] no force or effect." That put the final nail in the coffin of Lessie Kirksey's argument.

It is common practice to require an insured individual to designate his beneficiary in writing. What OPM and Congress require is no different from what most insurance companies require. The case offers no explanation as to why Kirksey did not sign the form. The only inference one can make is that he did not want to sign it.

This case points out the importance of drawing up a will and properly attending to all other matters associated with the disposition of one's assets after one's death. We'll never know for sure whether Pink Kirksey wanted his sister to be the beneficiary of his life insurance policy. But if he did, all he had to do was sign a form he had already filled out. Because he did not sign it, the court had no choice but to assume otherwise.

--Bureaucratus is a retired federal employee who contributes regularly to Federal Computer Week.

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