It’s a common practice to create a Durable Power of Attorney (POA) that designates someone who can act on your behalf when/if you are unavailable or incapacitated. For servicemembers and Veterans, this is an especially important part of financial planning. On the other hand, a General POA will allow an agent to make transactions while you are alive and ends when you become incapacitated.
AAFMAA sometimes receives requests from people using a POA to make changes to a Member’s life insurance policy.
It’s important to know that a Power of Attorney does not automatically allow someone to make life insurance changes on behalf of a loved one.
What Is a Power of Attorney?
A general POA is a legally binding contract that assigns specific decision-making authority to a trusted individual, usually a spouse or adult child. The Principal, for whom the POA is made, agrees to have a specific person (the Agent) handle financial or estate issues on the Principal’s behalf.
Some states have adopted the Uniform Power of Attorney Act (UPAA), which seeks to standardize the language and powers granted across states. This means that a POA made in one state must be honored in another state, even if the other state has different laws.
If you’re unsure about the limitations of a Power of Attorney in your or another family member’s state, check your state’s legislation.
Power of Attorney for Insurance Purposes
Many states restrict Agents from making changes to the Principal’s life insurance unless the matter is expressly granted in the POA. If it’s not clearly stated in the POA, Agents are not able to make changes to a life insurance contract or change the beneficiary designation or add themselves as a beneficiary. State governments put this restriction in place to protect the policy owner (the Principal) and previously designated beneficiaries.
Other Issues Regarding Power of Attorney and Insurance
You must make sure your POA explicitly states whether or not your Agent may make changes to your life insurance policy and what exactly those changes may include. Otherwise, the person you entrust may not be able to make the changes you request.
If you want to draft a POA or wish to make changes to your existing one, your military installation's legal services can help. They can also help you make sure your POA contains the appropriate language to allow your Agent to make life insurance changes on your behalf.
AAFMAA Members also have complimentary access to AUSA’s Law Assure program to draw up legal documents. More information on accessing Law Assure is available when you log into the AAFMAA Member Center.
Manage Your Finances with AAFMAA
Whether you’ve just enlisted or if you retired long ago, your financial security is our mission. Learn more about AAFMAA’s exclusive Member Benefits today, or contact us with questions. We’re here to help!
This article was originally published September 14, 2021.