Dear Insurance Adviser,
Can my husband’s ex-wife collect on his life insurance? I have been paying on the policy for the past 10 years. But she is trying to claim that he owed her alimony from 25 years ago.
— Lynda

Dear Lynda,
There are three parties to a life insurance contract.

  • The insured: the person whose death will trigger payment of the life insurance proceeds.
  • The owner: the person or organization responsible for paying the premium and the only party that can change the policy. The owner also has exclusive rights to any accumulated cash values and/or dividends. The insured and the policy owner are often, but not always, the same person.
  • The beneficiary(ies): the person(s) or organization named in the policy to whom, upon the insured’s death, the policy proceeds are payable.

In your situation, the insured person is obviously your husband. Creditors such as your husband’s ex-wife are not a party to the contract and have no rights to proceeds. The only way his ex-wife can receive any of the proceeds upon your husband’s death is if she’s the beneficiary.

Now here’s an interesting twist: If your husband’s ex-wife was the policy’s original owner and if that never got changed when he married you, she could, as the owner, take over the premium payments and change the primary beneficiary to herself. Would the fact that you have been paying the policy premiums for the past 10 years give you any rights? No, it would not!

Here’s what I suggest. Check to make sure that the owner of the life insurance policy is either you or your husband, and then make sure the primary and backup beneficiaries are set up the way you want. If his ex-wife is the owner, she’s in the driver seat and you’d need to either work something out with her or quit making any more premium payments.

Good luck!

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