According to the American Psychological Association, about 40 to 50 percent of married couples in the United States divorce. The divorce rate for subsequent marriages is even higher.* This is a brutal reality for MANY people. And for several, this means a requirement for life insurance by way of a divorce decree. I don’t mean to make light of the situation, but when you are getting out of a marriage with a “donkey,” and then you are required to pay alimony AND put a life insurance policy in-force to ensure the alimony continues in the event of your demise, you have to find the silver-lining somewhere. Case in Point: Recently Divorced 63yr old male….Standard NT Mr. Has-to-Pay-Alimony currently has a $20k annual alimony obligation; to be paid over the next 20 years.
Three months ago he purchased (from another agent) a $400k 20 year term with Banner that is intended to guarantee an alimony payment of $20,000/year for 20 years (i.e. $400k total). The annual premium is $5,399. And Mr. Has-to-Pay-Alimony hates stroking a check for the life insurance. In an attempt to be creative, and find that silver-lining, I recommend replacing the Banner $400k 20yr policy with Protective’s $450k 10 year Custom Choice UL.
REMEMBER - - - this is the “Term on a UL Chassis” where the DB decreases after the term period, and the premium stays the same.
If you bump the Death Benefit up to $450k, the numbers work out perfectly for Mr. Has-to-Pay-Alimony. In year 11, the death benefit decreases to $226,016 (obligation at that point is $20k for 10 more years….i.e. $200k), and the Custom Choice UL policy continues to decrease perfectly in line with the alimony obligation (i.e. in year 15 he is obligated to provide 6 more years of $20k/yr in alimony….or a $120k DB should he pass away….and the CCUL policy has a DB of $120,182 at that point).
Oh, and the annual premium on the $450k Custom Choice UL is $3,420.
Ha! The “donkey” of an ex-spouse gets a trimmed down death benefit in the final 10 years, AND the insured saves almost $2,000 per year. Talk about silver-lining!!! |
