Policy Owner, Cash Values, Married Couple

[0b1kanobee]

If a wife takes out a policy on her husband, who is the owner of the policy or are they both without getting too technical?

In this example, let's say the wife wants to take out a small WL policy on her husband. They have shared checking accounts ect. (her money is his and his is hers). Anyway she does (takes out life insurance) this thinking she will outlive him. No policy on her.

Let's say she dies first though. Does the cash value belong to him now? If not why and how do you set it up so that the cash value would belong to him if she died. Maybe this is where those first to die policies come into play I dunno.

I feel like I'm having some kinda brain fart here.

 

[Newby]

If a wife takes out a policy on her husband, who is the owner of the policy or are they both without getting too technical?

In this example, let's say the wife wants to take out a small WL policy on her husband. They have shared checking accounts ect. (her money is his and his is hers). Anyway she does (takes out life insurance) this thinking she will outlive him. No policy on her.

Let's say she dies first though. Does the cash value belong to him now? If not why and how do you set it up so that the cash value would belong to him if she died. Maybe this is where those first to die policies come into play I dunno.

I feel like I'm having some kinda brain fart here.

There is usually only one owner. It's whoever you made the owner on the application. If you left it blank then the insured is the owner.

If the owner dies and there has not been a contingent owner listed then the insured becomes the owner.

 

[LGilmore]

Yea, that's a pretty healthy brain fart going on. Is this a real life situation?

Are you in a community property state?

 

[0b1kanobee]

Yea, that's a pretty healthy brain fart going on. Is this a real life situation?

Are you in a community property state?

I'm in Florida and yes it is real life situation. I just need to be able to let my client know that if she dies before the husband, either the policy will be his to keep on himself or the cash value if he decides to cash it in or borrow against it assuming there is cash value.

Another words, this is more than just term Mr. Smith in that it is permanent and no matter what happens with who dying, it is either going to pay a face amount or have cash value to someone whether it be her or him.

 

[BNTRS]

99% of the time the answer would be:

If she died first, ownership would transfer to him.

 

[LGilmore]

unless she names a successor owner, it would normally go to the insured. Is there a reason she doesn't want her husband to own his policy?

Oh, I think I caught her point. If she dies first and he doesn't need to carry life anymore, can he have the cash values? if he is the successor owner, then yea.

 

[Todd King]

Just put it in his name and be done.

 

[0b1kanobee]

Just put it in his name and be done.

I guess I found some answers I was looking for in this article. I guess her concern is that she is the one who is actually paying the premiums out of her money she has set aside. If something happens to her then that money would go to him. She is a control freak and wears the pants. I guess she doesn't want to pay premiums for 5 years and then have him decide to change the beneficiary to the church. Maybe this would clear a few things up as to why I ask this question and also if she dies then he should inherit her money but he has no money set aside if he dies hence the life policy on him.

He used to have money but he blew it on bad investments. So now even though they share money, they just don't share her 'saved retirement accounts' like her two annuities (until she turns the income on then I suppose she will share) or her Scotrade account.

Here is the article I found which is starting to make some sense. I'll print this out and keep it with me in my FAQs binder since I frequently get asked the craziest questions.

Who should own your life insurance policy? | Estate Planning Answers

 

[dgoldenz]

Just wait until they get divorced and she owns the policy on his life. That'll be fun.

 

[0b1kanobee]

Just wait until they get divorced and she owns the policy on his life. That'll be fun.

1) They are in their 70s and been married forever. You are talking two die hard Baptist here and divorce with these two just would never be an option. Hell I don't think they sleep in the same bed as it is. What's to divorce?

2) If he wants his own policy, he needs to get another job.

3) I honestly just don't think she trusts him to not change the beneficiary to the church. Maybe he is trying to buy his way into heaven or something and she is a Bible thumper too she just isn't taking any chances with more bad decisions. The church won't get anything till they are both in the ground and she wants it that way. Him I dunno.

She's mainly concerned with the mortgage being paid off. In the event of a divorce knowing this lady, she would probably just cash in or cancel the policy. That's why there is no one size fits all in this business.

They are regular clients. Both been rich and poor together a few times but now more on a fixed income due to the last bad business decision. They have had life policies before but cancelled them. Now they (mainly her) are realizing it might not be such a bad idea to have life insurance.