Contingent Payor Question

[LifeInsurancePro]

Wife wants to take a new policy out on her husband once his old one terms out, if something were to happen to her, could she set up a contingent payor and they have a new beneficiary of the policy? i.e. their son? Or can he take over as payor and update the beneficiary himself? (She was the beneficiary on his last policy)

 

[Allen Trent]

Wife wants to take a new policy out on her husband once his old one terms out, if something were to happen to her, could she set up a contingent payor and they have a new beneficiary of the policy? i.e. their son? Or can he take over as payor and update the beneficiary himself? (She was the beneficiary on his last policy)

Only the owner has rights to change bene, etc. Most policies sold today have default language that the insured becomes the owner of owner dies. Policies are fairly silent contractually on who the payor is & the payor has no rights during lifetime or at death.

So, the question is who is the owner & is there a contingent owner?

 

[WMSG]

From what I gather from your post, keep in mind, the payor is less important than the owner. The payor has no rights. Ideally, the wife would -- want to be, and -- have to be the owner. She would have to then arrange for a contingent owner. After that, who is authorized to pay can be established. All the best.

 

[rousemark]

The owner can pass on the ownership of the policy in her will. The policy is asset in her estate.

 

[Allen Trent]

The owner can pass on the ownership of the policy in her will. The policy is asset in her estate.

I believe that is only true for policies that are silent on contingent owner or policies that don't have contract language making the insured the owner at death of owner. Just like contract law supersedes a will for named beneficiaries. Wills only come into play if the asset is a probated assets. I don't believe joint/ contingent owned assets or assets that pass by contract will make it to the probate process

 

[rousemark]

I believe that is only true for policies that are silent on contingent owner or policies that don't have contract language making the insured the owner at death of owner. Just like contract law supersedes a will for named beneficiaries. Wills only come into play if the asset is a probated assets. I don't believe joint/ contingent owned assets or assets that pass by contract will make it to the probate process

Yes, I was talking about if there was no named contingent owner..

 

[Allen Trent]

Yes, I was talking about if there was no named contingent owner..

But even then, many current applications state the insured becomes the owner at death of owner if no contingent owner named

 

[rousemark]

But even then, many current applications state the insured becomes the owner at death of owner if no contingent owner named

Then that is effectively a "named" contingent owner.. but, I haven't encountered that on Tennessee apps and that is the only state I am licensed in.

 

[Allen Trent]

Then that is effectively a "named" contingent owner.. but, I haven't encountered that on Tennessee apps and that is the only state I am licensed in.

Maybe it is more standard in traditional life & less common in final expense, etc. Here is a sample. without this type of language or a contingent owner, policies have to un-necessarily go to probate & be exposed to creditors, delays, dispute when owner dies

 

[rousemark]

Maybe it is more standard in traditional life & less common in final expense, etc. Here is a sample. without this type of language or a contingent owner, policies have to un-necessarily go to probate & be exposed to creditors, delays, dispute when owner diesView attachment 7180

Is that a TN app?