Life Insurance Claim

[Melo5457]

If a divorcee had a policy on spouse when married, then got a divorce, but she continued to pay on the policy, she is the Owner of his policy, at a later time she decided to convert the policy to an whole life policy for her ex spouse. Will she be able to collect on that policy if he passed away, if there was nothing in the divorce decree?

Thanks
Melo

 

[STIBROKER]

If a divorcee had a policy on spouse when married, then got a divorce, but she continued to pay on the policy, she is the Owner of his policy, at a later time she decided to convert the policy to an whole life policy for her ex spouse. Will she be able to collect on that policy if he passed away, if there was nothing in the divorce decree?

Thanks
Melo

yes....

 

[rousemark]

yes....

Would not the insured, as well as the owner, have to sign the conversion application? That might create a bit of a problem.

 

[STIBROKER]

https://www.lgamerica.com/forms/banforms/Administrative Services Forms/ICC09-LU1285-MA.pdf

 

[rousemark]

https://www.lgamerica.com/forms/banforms/Administrative Services Forms/ICC09-LU1285-MA.pdf

The instructions do not state the insured has to sign but the form has a place for the insured's signature as well as that of the policy owner.

 

[Melo5457]

Upon the conversion, a call was made to the Insurance Company --and policyholder was advised that the insured did not have to sign,,,because I thought he would have to also.

 

[STIBROKER]

so....again.....yes...and btw....this was the question....Will she be able to collect on that policy if he passed away, if there was nothing in the divorce decree?..........which is a clear yes if the prem is paid and in force......

 

[rousemark]

Upon the conversion, a call was made to the Insurance Company --and policyholder was advised that the insured did not have to sign,,,because I thought he would have to also.

She is in like Flynn! .. Now, all she needs is for him to kick the bucket...

 

[WinoBlues]

If a divorcee had a policy on spouse when married, then got a divorce, but she continued to pay on the policy, she is the Owner of his policy, at a later time she decided to convert the policy to an whole life policy for her ex spouse. Will she be able to collect on that policy if he passed away, if there was nothing in the divorce decree?

Thanks
Melo

I believe this is state specific - make sure the Bene now reads Ex Wife and not Wife. Same for any existing policy. I have had two deals where I nor the insurance company were informed of the divorce. At claim the companies paid to the contingent or next of kin. In one case three adult children in the other a grandson. The owner payor got zero.

 

[Allen Trent]

yes....

not true in most, if not all states.

Most states laws void any rights as owner of beneficiary at the time of divorce unless the divorce decree specifically stated the exact policy could be retained by the ex-spouse. the only way an ex-spouse can collect in most states is if the divorce decree stated it or if the beneficiary form is updated after the divorce stating "ex-spouse" as the beneficiary.

the problem is most divorces are done on shoe string budget & therefore get the default plain decree language that doesn't state anything about the life policies. even if the person pays for years or decades or the ex-spouse is a rider on the policy, the carrier will have to pay the claim to the estate, not the spouse. the reason is that the person stated the spouse was the beneficiary as a class of individual.

It is a mess. I have seen several multi -line agents get sued because they failed to update the beneficiary form after knowing about a divorce. PC agents are likely more at risk because they tend to know about the divorce when the auto & home policies are changed at time of death.

attached are a couple of articles on the subject for Michigan and my understanding is that the Michigan law came from National case law or language on the subject.

I believe the state law where they die would have to be followed, not where they lived when the policy was bought. So, safest to be vigilant about beneficiary updates & to make sure a divorce decree is clear or a new bene form updated after death.

this is another reason why spousal term riders can be such a bad idea unless they are allowed to be moved off to their own stand alone policy at time of divorce.