by Guest » Mon Jul 05, 2010 08:11 pm
Q. My husband is prior military and has now retired. His ex-wife receives half of his pension for being married to him over 10 years. My husband's ex wife has [wants to continue] to take a life insurance policy out on him in case of his death; due to the fact half of his pension will stop being paid to her upon his death. Is this legal? What are the ramifications, if any to myself his current spouse? Thank you.
Posted: Mon Jul 05, 2010 09:21 pm Post Subject:
A few questions here.
I'm assuming that "wants to continue" means that there is an existing life insurance policy with the ex-wife as both the beneficiary and owner and your husband as the insured. I'm also guessing that this existing policy is a convertible term policy which is about to expire. Am I right so far? If not, please tell me what we're working with here.
Posted: Mon Jul 05, 2010 09:34 pm Post Subject:
This will depend on a few things. First, what does the divorce decree say? If it requires it, then yes she'll be able to continue.
Additionally though, what is the current policy? Is the ex-wife the owner and beneficiary? If so, she's free to keep the existing life insurance policy. If it's term with a conversion option, she can exercise that option and turn the policy into permanent life insurance if she wishes. Even if the divorce decree does not stipulate the need to carry life insurance she can continue any policy currently in force that she owns.
Now, if as twitch has suggested, she's running out of time on a term policy and wants to simply buy another one on his life, she needs his consent if not in the decree. She could attempt going back to court and adding this requirement. Alternatively your husband could simply agree to allow her to purchase the insurance on his life.
There is no legal ramification to you. But there is one ramification to him, this is, whatever amount is purchased on his life, will be deducted from the entire amount that he is allowed to carry. This number changes from carrier to carrier, but it does effect the amount he'll be eligible to buy on himself say for you to receive when he dies. Depending on the amount of money we are talking about, this may or may not be something to worry about.
Posted: Fri Jul 09, 2010 05:22 am Post Subject:
But there is one ramification to him, this is, whatever amount is purchased on his life, will be deducted from the entire amount that he is allowed to carry.
This is an often overlooked aspect of life insurance. It would seem that the amount of insurable interest would be limited to the potential amount of lost pension benefits, based on current life expectancy. For example, if life expectancy is 20 years, and the current "half" of the pension benefit is valued at $500/month, then the potential lost income if the insured dies today is $120,000. To obtain more insurance than that could be unreasonable.
Posted: Sat Jul 10, 2010 04:26 am Post Subject:
This is an often overlooked aspect of life insurance. It would seem that the amount of insurable interest would be limited to the potential amount of lost pension benefits, based on current life expectancy. For example, if life expectancy is 20 years, and the current "half" of the pension benefit is valued at $500/month, then the potential lost income if the insured dies today is $120,000. To obtain more insurance than that could be unreasonable.
Maybe, but my quess is the insurance company will figure a maximum based on (if age a multiple of income) or (if older than 60) would be willing to write a policy worth the individuals networth, or cover debts.
However, your point was intended to speak more to the insurable interest of the ex spouse. Which would make sense as proportionate benefit from the pension. But, most times insurance companies aren't open to the insurable interest of thie ex spouse, but what the insurable interest is for say a current spouse, making it entirely possible for the ex spouse to get a policy with the benefit amount for the individuals entire insurable amount.
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