Naming an ex-spouse as beneficiary in Texas

[shonceman]

I have a Final Expense application that’s been flagged by underwriting because my client named her ex-husband as beneficiary. They’re saying that under Texas law, an ex-spouse can’t be a beneficiary.

I’ve searched it out in both Texas insurance law as well as family law. Under the insurance statutes, the owner of a life insurance policy can name anybody they choose to be beneficiary. Under Texas family law, there is a statute (that I was already aware of) regarding life insurance that was taken out prior to a divorce. In that case, if the spouse is listed as beneficiary, they’re automatically invalidated when the divorce is finalized, unless the decree states otherwise. I think underwriting may be misinterpreting the provisions of this statute, which only applies to policies that existed pre-divorce. However, even in those cases, if the ex-spouse has been invalidated, the owner of the policy can rename them post-decree.

In this case, the application was written long after the divorce was finalized. She wants to name her ex because they’re still friends. She trusts him to see to her funeral arrangements, as well as just wanting to leave him a little something. I can’t find any problem with that under Texas law. I’ve written several apps on men who were under a court order to obtain life insurance for the benefit of their ex and their children. But this is the first time I’ve ever had a client ask to name her ex as bene!

Any Texas agents have any insight on this?

 

[DHK]

Just a thought - you can name someone else and then change it later.

Or give an insurable interest reason for the ex to be named, such as child support or alimony.

 

[shonceman]

Just a thought - you can name someone else and then change it later.

Or give an insurable interest reason for the ex to be named, such as child support or alimony.

This company has taken applications from me in the past that listed a friend as the primary beneficiary as long as I explained that the friend would be responsible for the funeral arrangements. This doesn’t seem to be any different, except that the underwriter believes that he CAN’T legally be named.

I tried to reach underwriting this afternoon to discuss it. I’ll try again tomorrow. If I fail to convince them to take it, I may try naming someone else for now. Or I may just take her to another carrier. However, she already has a policy with this company naming her grown children as beneficiaries. She’d prefer to keep it all with one company.

 

[fed up]

Dont list a beneficiary on the App or just state ESTATE. Once issued put in the change

 

[scagnt83]

Speak to compliance, nothing against the law about it. It happens every day when a judge orders it to happen.

 

[shonceman]

I spoke with the underwriter this morning. This particular underwriter and I have had a good working relationship for a decade now. I went over the applicable Texas law with her, which she was misunderstanding. She was satisfied with my explanation of the law. She just asked me to submit a statement of the ex-husband’s insurable interest (“will handle her final expenses”), along with documentation of the Texas law in question. Easy Peasy!

 

[shonceman]

Ironically, as I was sending off the requested documents, another client called me wanting to take out a policy on her ex who just got out of prison. This is the complete opposite of the above case. I get requests like this one a couple times every year. In her case, there’s really no insurable interest. But she said she just wants it for the benefit of his children. So, I suggested having her 19 year old daughter to be the owner and beneficiary. She said that will work.

 

[Life Hawk]

Just a thought - you can name someone else and then change it later.

Or give an insurable interest reason for the ex to be named, such as child support or alimony.

I've done this several times. Crazy that it is even an option as a work around... talk about loop holes.

Are companies afraid that ex's have nefarious motives?

 

[shonceman]

Are companies afraid that ex's have nefarious motives?

According to the underwriter, that’s exactly what they’re worried about.

In this case, I wanted to have the discussion in case she could show me that I was wrong about the law. If she had been right, I anticipated running into the same difficulty with customer service if I just tried to change it to the ex later.

 

[fed up]

Ironically, as I was sending off the requested documents, another client called me wanting to take out a policy on her ex who just got out of prison. This is the complete opposite of the above case. I get requests like this one a couple times every year. In her case, there’s really no insurable interest. But she said she just wants it for the benefit of his children. So, I suggested having her 19 year old daughter to be the owner and beneficiary. She said that will work.

If just released from prison, how are you going to insure? Most Underwriters are going to want to see good behavior while on parole and then bump the premium for a few years