Most life insurance policies are regulated by State Law. But, what if the life insurance policy at issue is governed by Federal Law? It’s simple, Federal Law pre-empts State Law. This is illustrated in the 2001, United States Supreme Court opinion styled, Egelhoff v. Egelhoff.
The Egelhoff opinion, the Supreme Court held that the Employee Retirement Income Security Act (ERISA) preempts a state law that revokes a life insurance policy beneficiary designation when spouses divorce. The state statute as issue in the Egelhoff opinion provided that if the life insurance beneficiary designation of an ex-spouse was made before the divorce, that designation was considered revoked. Because the insurance was part of an employee benefit plan, the Supreme Court held that ERISA preempted state law so that the benefits would be paid in accordance with the plan documents. The insured had not changed the beneficiary designation according to the plan, so his ex-wife received the benefits. Texas has a statute which would be prevented, that statute being Texas Family Code, section 9.301.