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Life insurance on the higher earning spouse

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  • Life insurance on the higher earning spouse

    I'm negotiating a separation agreement with my STBX. She has no income and I will likely end up paying close to the maximum based on DivorceMate (rule of 65).

    We've talked about having a life insurance plan on me since if I die young, she will be in trouble financially. However given my age this is not cheap.

    I don't mind being insured with her benefiting but I don't think I should pay the premiums since it would mean over 50% of my salary would be going to my STBX and I receive no benefit.

    Any thoughts? Who usually pays for this type of insurance?

    Thanks!

  • #2
    Are there kids involved? Can you separate yourself from HER to know that there are kids that require ongoing care? Dunno your story. Haven't checked it out. But making decisions for THE KIDS (even if through her temporarily) will benefit THE KIDS. Not necessarily her. DivorceMate calculations I believe are necessary if you care about long-term effects on those that you are responsible for (kids).

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    • #3
      No kids involved. This is purely for spousal support.

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      • #4
        Did you discuss life insurance while you were still married? If you didn't have a policy then, what was the plan for her support if you died unexpectedly?

        Personally, I don't see why the existing 'death of the breadwinner' plan has to change just because you are getting divorced.

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        • #5
          I have life insurance through work, N x annual salary, and additional term insurance.

          The plan through work can continue but if I start my own business or do something that doesn't have this benefit it goes away.

          The premiums for the term plan go through the roof (about 10x) in about 4 years and I'd rather drop it then.

          So OK for now, but trying to look down the road. Rule 65 applies in my case so this is long term.

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          • #6
            Originally posted by ifonlyihadknown View Post
            I have life insurance through work, N x annual salary, and additional term insurance.

            The plan through work can continue but if I start my own business or do something that doesn't have this benefit it goes away.

            The premiums for the term plan go through the roof (about 10x) in about 4 years and I'd rather drop it then.

            So OK for now, but trying to look down the road. Rule 65 applies in my case so this is long term.
            So, had you stayed together, what would you have intended to do if you started your own business and lost the benefits? What would you have done about the term plan at the premium increase date?

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            • #7
              Hadn't thought about that... Didn't get that far.

              Probably wouldn't have thought about starting my own business. STBX is very risk adverse.

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              • #8
                Originally posted by ifonlyihadknown View Post
                No kids involved. This is purely for spousal support.
                Okay. No kids. So it's for spousal support... Yawn. Get a grip, the law is the law. I'm a man too. Can't get out of it depending on the situation.

                Did you indicate anywhere how long you were married? Can she sustain herself? How old is she? does she have any career training? What did she give up for you WITHIN REASON?

                Is there enough time for her to pursue a career that will equal to yours, dependant on the above?

                This is not just about you, and I'm a man too. Separation takes into account DEPENDANTS inclusive of your STBX. Weigh it out. Consider the law. Work your numbers from that whether you like it or not. Sad but true. This is what happens upon separation and the roles you both play through your union. Makes you wonder if you could fall in love again, eh? Ha

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                • #9
                  Originally posted by ifonlyihadknown View Post
                  I have life insurance through work, N x annual salary, and additional term insurance.

                  The plan through work can continue but if I start my own business or do something that doesn't have this benefit it goes away.

                  The premiums for the term plan go through the roof (about 10x) in about 4 years and I'd rather drop it then.

                  So OK for now, but trying to look down the road. Rule 65 applies in my case so this is long term.
                  I don't really know anything about this, but if your coverage through work is more than a year's salary and your income is high, that sounds like a pretty big chunk of change in the event that you predecease her. I suggest you drop the term insurance if/when the premiums become too high, but undertake to maintain the same level of coverage as you currently have through work, should you leave your present job (which might get pricey - and which might be a factor in deciding whether or when to start a new business). (Remember also that the older you get, the less coverage you should be carrying, because she'll be older too and won't have as many years to spend the money).

                  Who inherits your estate, as you have no kids? Would you consider putting something in your separation agreement to the effect that your estate would pay your spousal support commitments, perhaps at a reduced level?

                  If you had remained married and had died young, your spouse would have suffered a financial setback. The fact that you're getting divorced doesn't mean that she gets a better deal if you die.

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                  • #10
                    Thanks, stripes. All makes sense.

                    I'm curious who usually ends up paying the premiums. If my STBX pays, then she has some control over how much insurance there is to make her feel safe. If I have to pay, then obviously I want to minimize the premiums.

                    I'm assuming that it's case by case who pays. I wonder what people have done and the reasoning behind it.

                    Cheers,

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                    • #11
                      Originally posted by ifonlyihadknown View Post
                      Thanks, stripes. All makes sense.

                      I'm curious who usually ends up paying the premiums. If my STBX pays, then she has some control over how much insurance there is to make her feel safe. If I have to pay, then obviously I want to minimize the premiums.

                      I'm assuming that it's case by case who pays. I wonder what people have done and the reasoning behind it.

                      Cheers,
                      You could put it to her as a choice as to whether she wants to pay for extra insurance. She pays premiums for term insurance: she spends more money now, but would get more if you die. She doesn't pay premiums and the term insurance lapses: she spends less now, but gets less if you die. Her decision would depend on how cash-strapped she is at present, and how likely she thinks it is that you would predecease her. (I think you had mentioned that she isn't too financially literate so she might not be able to reason this all the way through unless she had some sort of financial advisor).

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