I have just spent ages surfing the net trying to find a company that offers insurance that can be "tailored" or is fit for a single parent.
I would really like to buy insurance that does the following:
1. Insures the life of my stbx with possibly critical illness cover until my youngest child is 18. (A sort of maintenance protection)
2. Insures my life for the term of my mortgage (now back at poxy 25 years)with possibly critical illness cover.
We currently have a joint life policy that we both pay half of, so the maintenance issue is currently covered. However I want to cancel my ties with him and have something in my own right, simply because I have bought him out of the FMH, and if I die I have nothing in place that will clear the mortgage and give my children an inheritance.
Have I really got to take two separate policies or does anyone know a company that is flexible?
Hiya onelife. I am not sure you can do that. Its like me insuring you and if you die and I cop the money if you do. When you are divorced all legal ties are broken. Ring and ask um. They will tell you if they can do it. Chris
If you already have a joint-life policy that does some of what you want, why not keep it? You could have the policy assigned to you or possibly put under a trust (for the benefit of your youngest child?). If you want to sever all ties, you could probably take over paying all the premiums, which could be quite simple to achieve. Putting the policy under a trust or making an assignment would require the consent and cooperation of your stbx, but so would taking out another policy.
ChrisM does have a point about taking out a new policy. There are two issues. One is the matter of “insurable interest” and the other is what is referred to as “moral hazard”. Insurable interest is a legal requirement; in short, it means that to take out a policy on another person’s life there must be a demonstrable and quantifiable financial loss to you on the death of the other person. In your case, this exists because of the mortgage and the maintenance. (Incidentally, for married couples, the insurable interest is said to be automatic and theoretically unlimited). This takes us on to the “moral hazard”.
Moral hazard is the risk of you finding it financially advantageous to bring about the demise of your stbx. It is very much a subjective issue and one that most insurers would like to avoid, which means that it would be difficult to find a suitably enlightened insurer. I can certainly see that if you have a policy that pays a lump sum on the death of your stbx the cash lump sum could prove more attractive than the regular payments. Whether you could or would do anything about it is an entirely different matter!
Insurable interest only has to exist when the policy is taken out. Similarly, moral hazard would normally only be looked at when the policy is taken out. It would not be an issue if the policy is assigned or put under trust. These are further reasons why you may be better off keeping the existing policy.
And Peter - thanks for the advice - really helpful and just saved me quite a bit of a money a month in extra premiums.
You gave me a chuckle as well on the moral hazard issue, but then I realised that actually - I'm worth a lot to him dead too - a lump sum, and he wouldnt have to make the regular payments!! Methinks I'll be calling the Insurers first thing tomorrow and see what I have to do to have it assigned!