Make remarriage another point to suggest a policy review with the client. That is not typically on the list of automatic triggers for policy review but it should be, notes Kathleen Bilderback of Affinity Law Group LLC, St. Louis.
Check and double check the beneficiaries. People often say they made an intended change several years ago, but often they didn’t get it done, says Michael Weisman of Enterprise Bank & Trust, St. Louis. “So, the advisor should comb through all the assets and the beneficiaries.”
Discuss what to do about existing life policies. It rarely makes sense to get rid of the old policy, because it’s an asset where the costs of purchase have already been paid, says Mandell S. Winter of Denver. “To refuse to use it for the new life and marriage would be like refusing to live in a house because someone else lived there before,” he says. But Bilderback thinks the advisor and client should evaluate whether the old policy is worth keeping, especially if today’s new life policies would better serve the need. But point out that changes in health and age will impact cost, cautions Weisman.
Plan for the kids. Boomers typically want to be sure their own kids will be taken care of should they die, observes Winter. So if a remarried boomer worries that life insurance proceeds will be spent by the ex or surviving spouse for things other than the kids’ needs, suggest the boomer set up a trust, funded by life insurance, that pays the bills for the kids. “That puts a collar on the custodial parent,” he says.
Develop a strategy for May-December remarriages. “In these cases, the much younger new spouse usually wants to know, ‘what happens to our kids if you die first?’” says Bilderback. The older spouse is not always thinking about this, she says. A related issue, says Weisman, is that children of the older spouse risk having to wait a long time for their inheritance (i.e., after the younger spouse dies). The advisor “needs to address the responsibilities and needs of everybody,” Weisman concludes.
What happens if the remarrieds can’t qualify for life insurance? If only one can’t qualify, suggest a first- or second-to-die policy that allows one life to be uninsurable, suggests Weisman. Or, consider modified or guaranteed issue life that ramps up after 2 years. If both can’t qualify, look at whether the spouse can qualify for guaranteed issue life under the other spouse’s group term policy (some plans at large employers allow this for newlyweds).
Don’t assume the employer will automatically update the group life insurance beneficiary to reflect the new marriage. “Employers don’t have a clue unless the employee tells them,” says Weisman.
View group life as extra protection, but don’t count on it, cautions Winter. “After all, most people die after they retire and no longer have group life. Or, the boomer might die while between jobs, when there is no group life.”