Can I Take Out Life Insurance on My Ex-Husband?

Obtaining a life insurance policy on an ex-spouse can provide financial security, especially when ongoing financial obligations exist from a divorce settlement. This ensures support payments, such as alimony or child support, continue even if the ex-spouse passes away. A fundamental legal requirement, “insurable interest,” must be established. This concept ensures the policyholder would experience a genuine financial loss upon the insured’s death.

Establishing Insurable Interest

Insurable interest is a foundational principle in life insurance, signifying a legitimate financial or emotional stake in the insured person’s continued life. Without this interest, a policy taken out on another individual is generally void. For an ex-spouse, insurable interest typically arises from a financial dependency or obligation that would result in hardship if the insured person died.

Common scenarios establishing insurable interest for an ex-spouse include ongoing financial support. If a divorce decree mandates child support, the custodial parent has an insurable interest in the ex-spouse responsible for payments. This ensures the children’s financial needs are met even if the paying parent is no longer alive.

Similarly, if alimony or spousal maintenance is received, the recipient has an insurable interest in the ex-spouse making those payments. The life insurance policy then replaces that income stream, preventing financial distress. Court orders outlining such support obligations serve as clear evidence of insurable interest.

Beyond direct support payments, shared financial liabilities or business interests can also create insurable interest. If ex-spouses remain jointly responsible for a significant debt, such as a mortgage or business loan, the death of one could place the entire burden on the other. A life insurance policy on the ex-spouse could cover their debt portion, protecting the survivor from financial strain. Business partnerships, where a partner’s death would cause substantial financial disruption, similarly create insurable interest.

Insurable interest must exist when the policy is issued. While some states automatically recognize insurable interest for ex-spouses in financial dependency cases, others might require more explicit proof. Insurers assess the financial relationship to confirm a genuine loss would occur.

Choosing and Applying for a Policy

Once insurable interest is established, the next step involves selecting and applying for a life insurance policy. This process requires cooperation from the ex-spouse whose life will be insured. The proposed insured must consent to the policy, often by signing the application or an affidavit.

The application process requires specific information and documentation from both the applicant and proposed insured. The ex-spouse’s personal details, financial information, and medical history are necessary for underwriting. Evidence supporting insurable interest, such as a divorce decree detailing child support or alimony, loan agreements for shared debts, or partnership agreements, must be provided to the insurer.

Term life insurance is often suitable in ex-spouse scenarios, particularly when financial obligations have a defined end date, such as child support until children reach adulthood. Term policies provide coverage for a specific period (typically 10, 20, or 30 years) and are generally more affordable than permanent policies. Whole life insurance, a permanent policy, offers coverage for the insured’s entire life and builds cash value, but comes with higher premiums. The choice depends on the financial need’s duration and desired premium structure.

Applying involves selecting a reputable insurer and completing their application form. The form requests information gathered during preparation. Following submission, the insurer’s underwriting department reviews the application, assesses the risk of insuring the ex-spouse, and determines the premium. A medical examination of the ex-spouse is usually standard, requiring their active participation.

Managing the Policy and Receiving Benefits

After obtaining a life insurance policy on an ex-spouse, managing it involves understanding ownership, premium payments, and the process for receiving benefits. The individual who applies for and owns the policy, typically the ex-spouse receiving support, is responsible for paying premiums. This ensures the policy remains in force and benefits are available when needed.

The policy owner controls the policy, including changing beneficiaries (unless irrevocable) and making coverage decisions. The ex-spouse who is the beneficiary should be the policy owner to maintain direct control and prevent unilateral changes by the insured ex-spouse. This arrangement safeguards the policy’s intended financial protection.

Upon the insured ex-spouse’s death, the beneficiary initiates a claim with the insurance company. This typically involves submitting a claim form and a certified copy of the death certificate. Insurers generally process claims within weeks to a month, though delays can occur if information is incomplete or if death occurs within the policy’s contestability period (usually the first two years).

Life insurance death benefits received by a named beneficiary are generally not subject to federal income tax. However, if paid in installments, any interest accrued on the unpaid balance may be taxable. While typically income tax-free, the death benefit can be included in the deceased’s estate for estate tax purposes if the estate’s total value exceeds the federal exemption threshold ($13.61 million for individuals in 2024). Some states also impose their own estate or inheritance taxes.