First time around, love and marriage may go together like a horse and carriage. But for the second time around, the saying should probably be “love and remarriage go together like advice and life insurance.”
That’s not poetic, but it gets to the point–i.e., boomers who remarry usually have many life insurance decisions to make and their financial advisors need to help.
The client discussions can get pretty dicey at this juncture in life, say experts. After all, although the remarrying couple is eagerly anticipating their shared life, they must now also plan for children from previous marriages, blended family issues, ex-spouse implications, and sometimes, divorce documents.
Still, for financial advisors, it’s is not an insignificant opportunity.
Boomers in the marrying way do want life insurance, according to 9,700+ baby boomers surveyed by Experian Research Services, New York, N.Y. In particular, “65% of presently married boomers and 65% of boomers who are engaged or married-but-not-for-the-first-time feel it’s important to be well insured for life insurance,” says Angelika Kaprelian, ERS national consumer survey brand manager.
“By comparison, only 50% of people who are divorced, separated or widowed feel that way.” The survey was conducted from May 2006 through June 2007 as part of the Simmons National Consumer Study.
What’s more, Kaprelian says, “43% of boomers in the first two groups said they are willing to buy $500,000 or more of life insurance while divorced; separated or widowed boomers had no significant response to this question at all.”
So, how do advisors help remarrying boomers take care of this? A lot of agents have not considered these issues, nor have they been proactive about educating domestic lawyers about using life insurance in remarriage situations, says Kathleen Bilderback, an estate planning and executive benefits attorney with Affinity Law Group LLC, St. Louis, Mo.
She and other experts are hoping this will change. Boomers, now age 42-62, include many people who remarry following divorce or widowhood, so advisors encounter them frequently.
If a boomer client is divorced, the advisor should ask to see the divorce decree, says Bilderback. Frequently, if the ex-spouse (ex) is not working, the decree requires the working-ex to keep existing life insurance and/or to purchase term life insurance, and to keep the coverage in force until the kids reach majority or finish college, she explains.
Or, if an ex is not working, the decree might require the boomer who is working to get permanent life insurance for the benefit of the non-working ex, she continues.
On the other hand, some boomers remarry after children get out of college, points out Michael Weisman, president-wealth products group of Enterprise Bank & Trust, a St. Louis comprehensive financial planning firm.
If the divorce decree had required that permanent life insurance be kept until that time, there is now an opportunity to change the policy’s beneficiary, he says. The boomer often doesn’t remember, he continues, so the agent should bring it up.
Amazingly, says Bilderback, some decrees have very sophisticated life insurance requirements. Her take: “Attorneys today are obviously consulting with someone who has knowledge of life insurance; they didn’t come up with this on their own.”
In any case, a decree’s requirements do need to be factored into any life insurance planning for remarrying boomers, stresses Bilderback, who formerly worked for two national life insurers.
What if the decree does not address life insurance or if the boomer is a widow/er? For one thing, there would then be no legal reason for the boomer not to make changes to the existing life insurance, says Mandell S. Winter, insurance educator and life insurance agent in Denver, Colo.
There would also be no reason for the agent not to implement any changes the boomer may request, he continues.
What if the agent doesn’t ever see the decree and doesn’t know whether it contains life insurance requirements? The agent can’t stop a requested change if the agent doesn’t know there is a court order prohibiting it, says Winter.
What if the agent knows that a court order prohibits changes to the life insurance, but the boomer insists on making the change anyway? “It is incumbent on the agent to let the client know that the client will likely be held in contempt of court for making the change. But the agent’s job is to give the forms to the client anyhow.”