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Life Insurance

How far does a Power of Attorney really go when it comes to life insurance policies?

2016-04-20

Many of us have prepared a Power of Attorney designating someone who can act on our behalf when we are unavailable or incapacitated. At AAFMAA, we occasionally receive requests by people acting with a Power of Attorney to make changes to a Member’s life insurance policy.

However, even a Power of Attorney doesn’t guarantee that a person’s agent has complete discretion regarding insurance policy changes. State laws define the legal uses of Powers of Attorney. Several have adopted legislation modeled after the Uniform Power of Attorney Act, which seeks to standardize the language and powers granted across states.  If you’re unsure about the limitations of a Power of Attorney in your state, or another family member’s state, check each applicable state’s legislation.

Many states actually do draw the line at life insurance when it comes to the Power of Attorney boundaries. Agents may not use a Power of Attorney to change a beneficiary designation (or add oneself as a beneficiary) unless expressly granted by the Power of Attorney. Many state governments put this restriction in place to protect the policy owner and previously-named beneficiaries.

The law in Virginia (§ 64.2-1631), home to AAFMAA headquarters, consistent with the act, does allow  an agent with a Power of Attorney to make beneficiary changes to their grantor’s life insurance policies. See exactly how Virginia grants general authority with respect to insurance and annuities right here: http://law.lis.virginia.gov/vacode/title64.2/chapter16/section64.2-1631/.

In Virginia, to reiterate, an agent under Power of Attorney may create or change a beneficiary designation “…only if the power of attorney expressly grants the agent the authority and exercise of the authority is not otherwise prohibited or limited by another statute, agreement, or instrument to which the authority or property is subject.” (See § 64.2-1622)

Make sure that the legal document that elects your Power of Attorney explicitly states whether or not your agent can make changes to your life insurance policy, and what exactly those changes may include. Otherwise, the person you entrust with your policy may not be able to enact the kind of changes that would benefit your survivors.

For more information regarding the Uniform Power of Attorney Act, visit: http://uniformlaws.org/Act.aspx?title=Power%20of%20Attorney

Has your state enacted the provisions of the Uniform Power of Attorney Act? Find out here: http://uniformlaws.org/LegislativeFactSheet.aspx?title=Power of Attorney.