Insurer pays life insurance proceeds to ex-wife; pays again to Estate

UNUM Life Insurance Company, rated one of the worst insurers in the country for treatment of insureds, put some of its flaws on display in a recent St. Clair County Probate case.  Gaylord Genaw had purchased a life insurance policy from the company and its value in 2006 was $110,000.00.  That year he and his wife divorced and the divorce judgment extinguished the ex-wife's interest in the life insurance. Days later, Gaylord was killed in a motor vehicle collision.  His ex- was still listed as a beneficiary on the policy and she applied for the proceeds, identifying herself as the divorced "ex-spouse."

UNUM did not ask to review the Judgment of Divorce as required by law [MCL 552.101(2)] and simply issued her a check.  When Genaw's son, the Personal Representative of his Estate, applied for payment under the policy 30 days later, UNUM refused, arguing it had already discharged its legal obligation.  UNUM continued to dispute its duty to the Estate, however, ultimately the trial court ruled that UNUM was obligated to pay to the Estate any balance remaining after the ex-wife's account was seized.  (The Court also awarded damages against the ex-, finding that she had wrongfully converted or embezzled the policy proceeds.)  

UNUM still refused to comply and filed an appeal with the Court of Appeals.  That Court upheld the lower court's ruling and its award against UNUM.  Since UNUM was expressly placed on notice of the fact of divorce, it was not entitled to claim that it had satisfied its duty of payment under the policy and remained accountable to the substituted beneficiary.