Spouse life insurance question

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samtex
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Spouse life insurance question

Post by samtex » Mon Jun 19, 2017 11:08 am

Many years ago, I purchased a Universal Life Policy on myself. :oops: The policy also provided a rider which included my wife and children with myself as the beneficiary. As the years went by, we divorced and later I remarried. I changed the beneficiary to my children in the event of my passing but didn't give much thought about the spousal coverage until recently. The insurance application did have my wife and children's name along with their birth dates. The rider sates... "the insurance is on the life of the insured's spouse named in the application for this rider." On the policy itself, only my name is shown. The other references are to "wife" and "children".

I haven't spoken to the insurance company yet but by reading this, would the spousal insurance rider be void for both my former wife, as well as for my current wife?

Samtex

mhalley
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Re: Spouse life insurance question

Post by mhalley » Mon Jun 19, 2017 11:31 am

You will need to contact your insurance co to see what happens in the event of divorce/remarriage. That is so common these days, they mostly have it in the contract. This article seems to imply the rider goes away in divorce.
https://lifeinsurancebyjeff.com/life-in ... sal-rider/

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flamesabers
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Re: Spouse life insurance question

Post by flamesabers » Mon Jun 19, 2017 11:35 am

Does the policy states what happens if you get a divorce? I imagine it would be in the fine print of your policy.

samtex
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Re: Spouse life insurance question

Post by samtex » Mon Jun 19, 2017 12:37 pm

flamesabers wrote:Does the policy states what happens if you get a divorce? I imagine it would be in the fine print of your policy.



Couldn't find the word divorce anywhere in the rider section.

Samtex

samtex
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Re: Spouse life insurance question

Post by samtex » Mon Jun 19, 2017 12:41 pm

mhalley wrote:You will need to contact your insurance co to see what happens in the event of divorce/remarriage. That is so common these days, they mostly have it in the contract. This article seems to imply the rider goes away in divorce.
https://lifeinsurancebyjeff.com/life-in ... sal-rider/


Well. that is what I was thinking too but wanted some other thoughts before I call them to get verification. I really didn't think too much about it until I saw the application with their personal information listed. My children are grown, so I knew they wouldn't be covered but was hoping there might be some coverage for my wife.

Samtex

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DaftInvestor
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Re: Spouse life insurance question

Post by DaftInvestor » Mon Jun 19, 2017 4:42 pm

I can't avoid not overlooking the obvious. Since you used the "D-oh" emoticon you seem to realize Whole Life insurance may not be the best option. Before you even figure this out did you consider dropping the policy and switching to a term policy? (In which case the question would be moot).

123
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Re: Spouse life insurance question

Post by 123 » Mon Jun 19, 2017 6:12 pm

If the rider for the coverage for the spouse was at an additional cost (I can't see how an insurance company would actually give anything away for "free") and there is no longer a spouse I would think some refund of premium may be due.
The closest helping hand is at the end of your own arm.

samtex
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Re: Spouse life insurance question

Post by samtex » Fri Jun 23, 2017 12:35 pm

DaftInvestor wrote:I can't avoid not overlooking the obvious. Since you used the "D-oh" emoticon you seem to realize Whole Life insurance may not be the best option. Before you even figure this out did you consider dropping the policy and switching to a term policy? (In which case the question would be moot).



Yes, I learned later in life the virtues of term policies. I also have one of those. My universal life policy was very inexpensive, so I just kept it. Over the years I didn't miss the small amount and as an added benefit it did have the spousal coverage. Over the years the insurance company has increased the cost of insurance, which became more than my monthly payment. Since I had a fairly good surrender value, I just let them take the difference from it. However over the last five years the difference above my premium has increased from 31.00 to 113.00 a month that they are reducing my surrender value.

I did call them and they explained that my ex-wife is still the insured party and that they would still pay in the event of her death. I had been under the false impression that my current wife was the one insured. My current wife is on my term policy but at half the benefit amount. Since my wife is older than my ex-wife, I thought the rate for the universal policy might be a good reason to keep it in force, except for the recent jump in the cost.

My term life policy has another five years to run at the current guaranteed rate. They are sending me a rate chart for continued coverage pass five years but I imagine I will cancel at that time.

It feels a bit macabre trying to take everything into account before making my decision. If I cash in my universal policy I will receive it's surrender value which is about half of the spousal benefit (ex-wife) and of course the loss of my coverage which is about seven times the surrender value.
I was actually surprised how much the cost of the policy has gone up the past few year, so I really hadn't thought much about this. At the current burn rate I can see it depleting the surrender value in eight to ten years.

If I cash out of the policy, I would probably put it in savings and ultimately put about 50-80% of it into the market. Since we are both retired, on SS and taking out RMD, I hadn't planed on investing any new money.

Thanks for any additional thoughts.

Samtex

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celia
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Re: Spouse life insurance question

Post by celia » Fri Jun 23, 2017 12:49 pm

Did you ask if it is possible to substitute your current wife's name for the ex-wife's?

Don't forget that the premiums are going to go up over time due to the fact that you are getting older (and thus closer to death). This is true for ANY kind of life insurance you get.

samtex
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Re: Spouse life insurance question

Post by samtex » Fri Jun 23, 2017 12:52 pm

celia wrote:Did you ask if it is possible to substitute your current wife's name for the ex-wife's?

Don't forget that the premiums are going to go up over time due to the fact that you are getting older (and thus closer to death). This is true for ANY kind of life insurance you get.


Can't change the names. The policy costs were taken into account based on the original application. Also my current wife is older which would also have affected the rating.

Samtex

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