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  • Life insurance changes

    Question about life insurance and clauses in SA.

    My partners agreement says he is to a) keep the joint policy he and his ex had (but separate it) for a certain amount and b) open a second policy for a lesser amount. His ex has to keep her insurance policy via work.

    In addition to these he also has a third policy he has carried over from before his marriage that is not listed in the agreement.

    Problem--the (a) policy is term and is expiring and to renew it his premiums triple or quadruple. He may not even qualify for the renewal since its been ten years, his health is different etc.

    Could he take his personal life insurance that wasn't ordered, up the payout to the (a) amount and replace the insurance in the agreement? If no, what would happen if he no longer qualifies for coverage on that renewal?

    He would still have the same coverage it just wouldn't be the policy listed.

  • #2
    Does the agreement give any specific direction on what happens if the policy lapses?

    Logic says that the purpose of the insurance is to provide for the financial responsibilities he has should he pass away before his child and spousal support obligations are completed. Over time, those financial responsibilities do decrease, so perhaps he would be ok to have a lesser amount now to replace the original? And this may not be quite so bad for insurance premiums?

    I doubt he would be penalized for this policy ending because ate what happens with term life insurance, nor is a court likely to order someone to obtain a new policy if the rates are exhorbant, I think he'd probably be ok with a lesser amount policy so long as it adequately voters his obligations.

    Personally I wouldn't bring the other policy he has into the question, but again that's just me personally.

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    • #3
      Policy a) was a joint policy that is coming to term. Does that mean hers part of that policy is about to expire too? If so her premiums would increase as well. Maybe she doesn't want to pay the increase either. She might be willing to agree to have both policies dropped... since they both have other policies anyway.

      eta: Who is the beneficiary on the policy from before the marriage?

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      • #4
        They severed the policy they held jointly. The language just says what he is supposed to do. The third policy beneficiary is a friend who has instructions in his will to use the money to pay off the mortgage and funeral expenses with the remaining going to his kids.

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        • #5
          Wouldn't he then have satisfied the terms? If it just said he had to keep the policy and nothing about renewing it or specifying that he always has to have x amount of insurance, then wouldn't it read that he has fulfilled his obligations regarding that particular policy?

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          • #6
            Today he found out his premium was going to be six times the amount so hes going to cancel. We reread the agreement. His lawyer was brilliant in that she had a clause put in that they can review their policies five years from the date of the agreement and then determine how much coverage is necessary based on the remaining obligations for child support. Technically if he uses his current income and the next five years of cs is less than half the coverage he currently has with his own policy. Whew!

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            • #7
              Originally posted by rockscan View Post
              Today he found out his premium was going to be six times the amount so hes going to cancel. We reread the agreement. His lawyer was brilliant in that she had a clause put in that they can review their policies five years from the date of the agreement and then determine how much coverage is necessary based on the remaining obligations for child support. Technically if he uses his current income and the next five years of cs is less than half the coverage he currently has with his own policy. Whew!
              I had term policy and instead of renewing it, my advisor said it was much cheaper to just do new term policy.

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              • #8
                Life insurance changes

                Thats what his advisor said too. We didnt read far enough into the insurance section of their agreement. The last clause outlined that they could review after five years and determine if it was necessary to keep so much insurance. Their agreement is so confusing that sometimes we get stuck on the first clause and dont realize there are other conditions that make that first one moot.

                I should add that the panic was because he didnt want to ignore the agreement. His ex only follows clauses that benefit her and misinterprets the clauses that allow for equality. He doesnt want to follow her refusal to adhere to the agreement. He wants to be able to say hes following it.

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                • #9
                  I totally understand. Sometimes I am the same way also...see the bad part and just focus on that instead of seeing if there is a loophole some kind.

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                  • #10
                    Interestingly, I don't think somebody can ordered to procure life insurance, you can only be ordered to maintain an existing policy, and can be ordered to make the beneficiary irrevocable.

                    Not 100% sure on that front, but that seems to be implied from the cases I have read.

                    If you don't have to provide proof, then just cancel the insurance and lie. The only time it would matter is if you were dead, at which point you are beyond the reach of our justice system.

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                    • #11
                      He has to advise her if there are any changes and hes planning to do that. Now that he knows he doesnt have to renew so much coverage because his cs obligations are almost over, hes not worried.

                      Although there was one clause I found interesting. He has to keep the insurance intact for a year after kids are eligible to cs. At least thats how I read it. So if kids are not eligible for cs or s7 school expenses, why does his estate have to pay them money? I get that they are his kids etc but the way theyre acting, hes been of the opinion he leaves them nothing. (Harsh I know but at this point thats more his hurt and disappointment talking...)

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                      • #12
                        Life insurance is creepy stuff. Most people don't die young in Canada. So, when people argue over it... It feels like they are hoping the other parent dies.

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                        • #13
                          Originally posted by Tayken View Post
                          Life insurance is creepy stuff. Most people don't die young in Canada. So, when people argue over it... It feels like they are hoping the other parent dies.


                          Very true. I had to explain to him last night that its not worth him going into debt to insure his kids have an inheritance. He heard rumours at work of layoffs and now he's stressed. Under the agreement, insurance is to cover his support obligations not an inheritance. If his current insurance outside the agreement covers it he doesn't need to over extend himself so he can make his kids happy. He will be dead. Considering they could care less about him alive its ridiculous to do this. That was just my opinion though. He's making his own decision. Although when I said to him "you're worried about leaving $125,000 to a kid who says 'I already talked to you this month, leave me alone' when that monthly fee could go on the mortgage or in an rrsp for your future?" he saw the stupidity.

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                          • #14
                            A family lawyer I spoke to told me off the record, that it is quite common for older payers of SS and CS to simply let life insurance policies lapse. I can see this happening in the case of couples who divorce as seniors.

                            After all, what can they do to you once you're dead!

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                            • #15
                              They can come after the estate. Which could get complicated.

                              When I was younger we had to make the difficult decision of cancelling the life insurance we had on my father. It was expensive for us since we lived on social assistance. We figured my father was hard drinking, eating, living so we would be cashing in sooner rather than later. Fast forward and my father is still kicking at 80. Saving that extra $40 a month was a good decision.

                              Comment

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