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Question for the Money Doctors

Question submitted on Mar 18, 2014.

Question

If a life insurance policy owner dies before the insured, and the owner has remarried, who then becomes the owner of the policy?

Answer

You raise an interesting question.

1. Life insurance policies may name a successor owner. Most do not.

2. There may be a stipulation in a divorce decree should one spouse die, the policy will be owned by a certain Person. Most divorce decrees do not have such a stipulation.

3. The owner's will may stipulate who inherits the policy.

4. If there is no clear stipulation by virtue of 1-3, then the owner's current spouse may have ownership. As a practical matter, if it is the spouse who ends up with ownership, usually the policy is looked to for its cash value if there is any. If it is a term policy, the spouse usually won't continue to make premium payments. If you feel it is in your best interest to own the policy, you may want to contact the surviving spouse.


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