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McCarthy v. Aetna Life Ins. Co. - 92 N.Y.2d 436, 681 N.Y.S. 2d 790, 704 N.E.2d 557 (1998)


As a general rule, under Pennsylvania, Delaware and New York law, the method prescribed by an insurance contract must be followed in order to effect a change of beneficiary. Such a rule serves the paramount goals of ensuring that life insurance proceeds are disbursed consistently with an insured's stated intent and of preventing the courts and parties from engaging in rank speculation regarding the wishes of the deceased. Strict compliance with the rule is not always required. Instead, there must be an act or acts designed for the purpose of making the change, though they may fall short of accomplishing it.


Plaintiff Christine McCarthy’s was the named beneficiary of a group life insurance policy issued to her former husband, Stephen Kapcar, by defendant Aetna Life Insurance Company (“Aetna”). The policy specified that beneficiaries could be named or change by providing written notice to Aetna at its headquarters. Kapcar became ill, and he and McCarthy separated and ultimately divorced. Kapcar spent the last seven years of his life with his father, and by his will, Kapcar left all of his property to his father. After Kapcar’s death, McCarthy filed a lawsuit in New York state court to claim the proceeds of the policy. After a non-jury trial, the trial court held that McCarthy was entitled to the proceeds because Kapcar failed to comply with the terms of the policy delineating the manner in which the beneficiary designation could be modified. The appellate term affirmed. On further appeal, the appellate division reversed and awarded the insurance proceeds to Kapcar's father. McCarthy appealed.


Was Kapcar's father entitled to the insurance policy proceeds?




The Court of Appeals of New York reversed the order of the appellate division, holding that there was no evidence that Kapcar made any attempt to change the beneficiary designation during the seven years between his separation from McCarthy and his death. Moreover, the court ruled, there was no evidence that Kapcar was physically or mentally incapable of attempting to substantially comply with the requirements of the policy. In the absence of such evidence, the court was restrained from holding that it was Kapcar's stated intention that his father receive the proceeds from the insurance policy. According to the court, to hold that a change in beneficiary may be made by testamentary disposition alone would open up a serious question as to payment of life insurance policies.

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