Buying life insurance on your Ex.
Putting aside any jokes one might have about applying for a life insurance policy on an ex-husband or ex-wife, the reality of the situation is that having such a policy is necessary to protect their financial futures for a lot of individuals.
During most divorce procedures, much of the negotiations that are going to occur are going to center around alimony and child support payments. All of which would likely disappear if the one responsible for such payments passed away prematurely!
This is why…
We wanted to take a moment to discuss some of the most important considerations one should consider when purchasing a life insurance policy on their ex-husband or ex-spouse that they can be sure that everything is done right!
Questions that will be address in this article will include:
- What is “insurable interest” and how is it determined?
- What type of “consent” will I need to obtain to purchase a life insurance policy on my ex-spouse?
- What type of life insurance policies can someone purchase on an ex-spouse?
- What steps should I take to ensure that I remain in control of the new life insurance policy purchased on my ex-spouse?
So, without further ado, let’s diver right in!
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What is “insurable interest” and how is it determined?
Whenever someone is considering purchasing a life insurance policy on someone else, the first thing that a life insurance companies is going to want to establish is that the OWNER of the life insurance policy has an “insurable interest” in the one being insure.
Which means that…
If the insured were to pass away, the life insurance policy owner would suffer FINANCIALLY from the insured’s death. Now in situations where court-mandated alimony or child support agreements are demonstrating this “interest” is quite easy. Still, even in cases where these “types” of payments are clear cut, most life insurance companies will be pretty flexible when determining an “insurable interest” in an Ex, especially if the couple has underage children together.
Where one might…
Run into trouble is when an individual is trying to purchase a life insurance policy on an ex where there doesn’t seem to be any financial connection with one another. They do not have any underage children together. In cases like these, it may be difficult to establish that an individual truly does have an insurable interest on the other, and in cases like these, it’s also usually difficult to get the proposed insured to “consent” to a policy being taken out on him or her as well.
What type of “consent” will I need to obtain to purchase a life insurance policy on my ex-spouse?
Regardless of what type of life insurance policy you may be thinking about purchasing on your ex-spouse, one thing that will remain the same is that the insurance company that will be insuring your ex will want to know that he or she is “OK” with this.
Each insurance company is going to have their own “rules” and “regulations” about what constitutes consent. Some may require that your EX sign the application itself or agree to sign an affidavit attesting to the fact that they are aware that you are purchasing a life insurance policy on him or here. Other insurance companies may be willing to accept verbal confirmation of “consent” over the phone, so they can confirm their identity.
May be really “relaxed” about confirming consent, particularly if the life insurance policy that you are applying for requires your EX to take a medical exam. After all, if your EX agrees to allow a medical examiner to come to their home, ask them a bunch of personal questions and collect a blood and urine sample, one can reasonably assume that they have a pretty good idea about what is going on (not always, but most of the time).
This brings us to our next topic which is…
What type of life insurance policies can someone purchase on an ex-spouse?
So, let’s assume that you are able to demonstrate that you have an insurable interest in your ex-husband or ex-spouse’s life and that he or she is willing to consent to you purchasing a life insurance policy on him or her.
“Which is great!”
But this doesn’t mean that he or she will automatically be able to qualify for life insurance.
All it means is…
That you will now be able to “apply” of coverage. The good news is that there aren’t necessarily going to be any limits on what “kind” of life insurance policies your EX will be able to apply for.
Which means that…
He or she should be able to apply for all sorts of different types of life insurance policies, including both traditional term or whole life insurance policies (medical exam required) and No Medical Exam Life Insurance Policies.
The reason why…
This is important is because, while it is true that not all divorces end badly and many times divorced couples do get along pretty well, this “cooperation” will often have it’s limits! Particularly when one EX is asking another to take a medical exam, which will include a blood and urine sample so that they can purchase a life insurance policy on the other!
For this reason…
We here at IBUSA will often recommend that clients first take a look at what options they may have that won’t require their EX to take a medical exam so that they can make the “process” of becoming insured as simple as possible, provided that it looks like your EX would be able to qualify for such a policy.
What steps should I take to ensure that I remain in control of the new life insurance policy purchased on my ex-spouse?
From there, it’s important to be sure that if and when you can purchase a life insurance policy on your EX that you do so in a way that you always maintain control over this new policy. This is why, we usually recommend that the Ex-spouse who is looking to purchase a life insurance policy on an EX always be the OWNER and PAYOR of the policy, so that they can be sure of two things:
- First, they can make sure that payments are always made on a timely basis so that the policy doesn’t lapse.
- Second, they and they alone will have control over who is the beneficiary of the life insurance policy.
If you are not the “owner” of a policy, and you’re simply the person paying the bills, this does NOT AUTOMATICALLY mean that you are in complete control of the policy. This means that it’s quite possible that the INSURED could decide to change the beneficiary of the life insurance policy without your knowledge even though you are the one paying the bills!
In cases where…
One can not become the “owner” of the policy; one can still insist that they become an “irrevocable beneficiary” of the life insurance policy which means that the owner of the policy would not be able to change who they would like to be the beneficiary of the policy without your consent.
“Which is good”
But still not as good as actually being the owner yourself because as owner, you would not only have this right, you would also be in complete charge of the entire policy as well.
Which brings us to…
The point where we like to remind folks that purchasing a life insurance policy is a “serious” matter and one that shouldn’t be rushed. This is why if you are considering purchasing a life insurance policy on your EX, we would recommend that you do your homework first, only work with a true-life insurance professional and have everything you need in order prior to reaching out to your EX.
Once you do get your EX’s consent, he or she will be able to quickly and easily apply and all of the “hassle” of applying will be taken care of. The good news is, that we here at IBUSA have plenty of experience helping couples like yourself get this done and know that simplicity and affordability are key in making everyone happy!
So, if you’re ready to get the process started and are interested in see what your options my be, just give us a call!