Joint life assurance policy after seperation

looby75

Hi

I'm just wondering if there is anyone here who could help me clear this up.

My (not quite ex) husband and I have 2 joint life assurance policies. We have decided to keep paying them even though we have been separated for over 2 years now, as they were taken out when we were much younger and the premiums for us to start again on our own will be a lot higher now.

He has run up a fair bit of debt since he left me and has recently taken a large loan of aprox £35,000. If he died would I be liable to pay back his loan and any other debts out of our joint life assurance payout?

If so the way he's been spending money I would end up having to pay out a sizable amount of the money I would receive (supposedly to pay for raising our two children) to cover his debts that I had no benefit from.

Neither of us have a will (I know we should but I just don't have the money to get one at the moment) but when we split we talked to the local cis agent we got one of our policies through and he said that we didn't need to do anything other than continue paying as it was a joint policy with both our names on, so any payment would automatically go to the surviving person, or if we both died our children. Is this right or is there something we need to do to make sure that we don't each end up having to pay each others debts off, or the children pay off both our debts.

I haven't got a clue about this kind of thing and thought it was all covered because we were both named on the policies.

dunstonh

My (not quite ex) husband and I have 2 joint life assurance policies. We have decided to keep paying them even though we have been separated for over 2 years now, as they were taken out when we were much younger and the premiums for us to start again on our own will be a lot higher now.

Dont assume that. Especially as you mention the policies are with CIS, who are not known for good value for money.

he said that we didn't need to do anything other than continue paying as it was a joint policy with both our names on, so any payment would automatically go to the surviving person, or if we both died our children. Is this right

That is correct.

looby75

dunstonh wrote:

Dont assume that. Especially as you mention the policies are with CIS, who are not known for good value for money.

Only one of the policies is with CIS (the smaller of the 2 and we only pay £11 a month on it), the other one is with Scottish provident.

The cis one is one where we will get all we paid in, plus bonuses back once we have had it for 20 years (if neither of us dies). If we cash it in now we will lose most of what we have put in so far, so we are definitely want to keep that one going.

Astaroth

If he dies then the life assurance will pay out and form part of the estate. Assuming he hasnt taken PPI out on the loan then any debtors will have "first dibs" on the estate and if anything is left it will be shared out as per his will. If the estate is less than the amount of the debts and there is no PPI then the rest of the remaining debts get written off (assuming the credit agreement for the loans were soley in his name and not your joint names) - your IFA/ Broker should confirm this.

Life assurance is an oddity as you only have to have an insurable interest at the time of buying the insurance unlike almost every other policy where you must have an insurable interest at the time of loss. Assuming you have updated your contact details/ benefitiaries etc on the policy then you dont need to do ought else.

dunstonh

If he dies then the life assurance will pay out and form part of the estate.

If joint life/joint owner, it pays to the surviving owner unless specifically in trust to someone else.

looby75

dunstonh wrote:

If joint life/joint owner, it pays to the surviving owner unless specifically in trust to someone else.

Ok just to clarify this (for my own peace of mind, as I said I've never had to deal with anything like this!)

If my ex started a new life assurance policy that was for him alone and my name wasn't anywhere near it then if he died it would become part of his estate, and any loans etc would be paid of using this.

BUT in my case, because it is a joint policy and my name is on it I get the money (if anything happens to him) and any co he owes money to can't touch it?

Sorry If I'm being dense here, it's just that I really don't want to be paying out money on a life assurance policy if there is a risk it could go to pay off my ex's spending sprees with his girlfriend (I'm only a little bit bitter right LOL)

looby75

Astaroth wrote:

Life assurance is an oddity as you only have to have an insurable interest at the time of buying the insurance unlike almost every other policy where you must have an insurable interest at the time of loss.

Sorry but I haven't a clue what that means! lol I am really no good at this stuff.

Bossyboots

Don't worry about that bit looby, you have the rest of it spot on now.

looby75

LOL I was starting to panic that I had missed some really important thing out for a moment and that I'd thrown my money away over the last 2 years!

Now I know why it's my sister who's a mortgage advisor and not me. I've never been good with money things!

Astaroth

looby75 wrote:

Sorry but I haven't a clue what that means! lol I am really no good at this stuff.

Sorry, it was just a point of interest rather than something directly relevant to your situation.

Just saying that with non-life insurance (say car insurance) you must have an interest in the insured item when the loss that causes a claim happens where as with life insurance you only need the interest in the insured item (ie a person) when the policy is taken out. So if you had car insurance and sold the car but didnt cancel the policy, if the vehicle was stolen 6 months after you sold it you couldnt claim on the motor insurance because you didnt own the vehicle and had no interest in it even though you hadnt cancelled the policy. If you say gave a loan to a friend you could take out a life asurance policy on them to cover the loan should they die before they paid it off. If they were lucky and came into money and paid the loan off 2 years early but they were then unlucky and dies 2 weeks later (luck as a way of balancing out) even though you no longer had a financial interest in their life anymore (as the loan had been paid back) you could still claim on the life insurance as you did have an interest when you took it out.

looby75

Ah right, thanks for clearing that up for me.

Hmm my sister owes me money, maybe I should get some life assurance out on her too lol (joke!!)