Quirk In Illinois State Law Voids Life Insurance Benefits For Ex-Spouses Upon Divorce

CHICAGO (CBS) -- A suburban woman has a warning for fellow consumers after she was booted as a beneficiary on her ex-husband's life insurance plan due to a little known state law.

She's sharing her story with CBS 2 Morning Insider Tim McNicholas to prevent headaches for other people.

Divorces can be rough, but Marie Schlitter said hers was as smooth as can be.

"There was no lawyers. We did it online, because it was a friendly divorce," she said.

It was so friendly, they didn't request any changes to their life insurance policy. But when he died earlier this year, State Farm told her she wouldn't get any benefit from her ex-husband, even though she believes she should get $80,000.

"It makes me aggravated, because I've always been overly insured," Schlitter said.

State Farm said they can't comment on specific cases, but they did direct us to a state law enacted in 2019, just after Schlitter's divorce, that says benefits for an ex-spouse are "void" once you're separated.

We asked a divorce attorney who is not involved in the case about the law.

"This law has been out there for a little while. I'll be honest, there's way too many people who don't know about it," said attorney Brendan Hammer, a partner at Schiller DuCanto & Fleck LLP

Hammer said anyone who wants their ex-spouse to stay a beneficiary should make sure that's specified in their divorce document.

But when Schlitter divorced, it wasn't a law yet, and she says she didn't learn of it until recently.

"They should be upfront about it, and have a special letter just for that, and send it off to their customers," Schlitter said.

After CBS 2 started asking questions, State Farm presented a possible solution.

Now her adult kids, the next beneficiaries in line, are signing paperwork to get her benefits approved, after a frustrating process.

State Farm said, in any case, they never keep the money from the plan. It would just go to other beneficiaries. If there are no other beneficiaries, the state would get it, so it's important make sure your paperwork is in order.