Hi mzmac. Sorry I didn't see this when you posted the question. I don't normally check "questions" (which I should as I do ASK a lot of questions as a Hub Pages greeter).
How did she do it? I have no clue.
Somehow she must have gotten herself changed to the SOLE BENEFICIARY on the life insurance.
Or, it could be that (and this is typical) the details of the policy were written that when your Dad passed 100% goes to his WIFE and then after SHE passes then you and your brother get money(?)
What I would suggest is getting your hands on a copy of the policy to see how the language reads.
If there is a lawyer involved (other aspects of your Dad's money in a will or trust?) he or she should definitely be able to explain how this happened.
Good luck! MM