Our country has changed and evolved over the past few decades. We have a divorce rate of 50% for many years now and this has lead to a growing number of couples getting remarried or living together with their families. It is not uncommon to meet couples with his children, her children and their children. This works well for the majority of couples until someone dies. Most of the time death is not planned for and can really cause an issue with a blended family. Life insurance and wills are needed more than ever in these blended families.
There is a couple in this very situation. The husband, we will call “Bill” and his new wife “Sue” blended their family upon remarrying. “Bill” had two daughters living with him and “Sue” had a son from her previous marriage. Very soon after marrying the couple became pregnant and now they become a family of six. Everyone was getting along fine and soon became a tight family as many blended families do. Because of their difficult divorces “Bill” kept his $250,000 life insurance policy but forgot to change the beneficiary and “Sue” let her life insurance policy lapse and never bothered to purchase new life insurance plan. Not a big deal until the unthinkable happened.
“Bill” traveled a lot with his work and drove a few hundred miles every week. He would finish his last appointment and try to drive home all night to be with his new family the next morning. One night “Bill” pushed his luck one too many times. “Bill” driving sleepy dozed off and left the road hitting a tree and did not survive. As you can imagine the devastation of his sudden loss to his family and friends was painful. As bad of a situation as “Bills” loss was, the after story gets even worse.
“Bill” never thought about the fact that his ex-wife was still the primary beneficiary on his life insurance and never changed it to “Sue”. He also never bothered to do his will. “Sue” found herself financially and emotionally devastated. “Bill’s” ex-wife took the two daughters back with no visitation rights to “Sue” and her two sons.”Sue” had no extra money to fight the ex-wife and was barely getting by as a single mother of two.
These problems could have been solved with an experienced life insurance broker . The beneficiary would have been changed, policies updated and purchased. There would have been strong recommendation of hiring an attorney to get the wills done. These items can be over looked by many blended families. If you are a blended family, don’t put these important things off. Make them a priority today.
“Nobody can go back and start a new beginning, but anyone can start today and make a new ending.” – Maria Robinson
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Tim Wilhoit is owner/principal of Your Friend 4 Life Insurance Agency in Nashville, TN. He is a family man, father of 3, entrepreneur, insurance agent, life insurance broker, salesman, sales trainer, recruiter, public speaker, blogger and team leader with over 27 years of experience in sales and marketing in the insurance and beverage industries.
Life insurance contracts protects the interest of every declared beneficiary This shields the weak members of blended families incase of succession disputes which are common to such families.
Great point Tim. Policies need to be regularly reviewed and audited. A great MGA I do businesess with, CPI Companies, offers policy audits as one of their broker services: http://www.lifeinsurancepolicyaudits.com/for-insurance-agents-and-professional-advisors/
Great lesson taught by this story, a reevaluation of your entire portfolio is always a good thing. Circumstances does change
This would seem to be the case not unique to the US. Modern society has definitely provided us with many new challenges, especially regarding insurance ownership in regards to your pertinent point, Tim. This should be a question on all advisers fact find ‘Do you have a current will?’. This then raises the difficult issues which can be resolved before the tragedy that unfolds as you have shown above. This also confirms to your clients that you actually have their best interests at heart, with a top lawyer/solicitor that you can recommend them to, this also helps you ring fence your client.
Great topic, and utterly invaluable lesson.
Steve, Marlon and Howard, thank you so much for sharing and your kind words. It is an important segment, that we cannot afford to overlook.
Unfortunately many kinds of families- blended, traditional, or whatever – wait until it is too late to look at their life insurance portfolios.
Shawn, sadly true. Thank you for sharing.
Nice story and helpful to all families. The need for insurance reviews should be just as important as doing your taxes. Each one should be done annually and given equal priority.
Tim, this is quite common in the Arab societies, specially when talking about the Egyptian market.
that’s why I always recommend to have a QCN “Quality Control Unit” to be responsible for doing the Quality control for the new business as well as the frequent checking for the existing portfolio
Thank you Tim for a memorable story. It is so important to conduct annual reviews of policies and investments regularly and ensure the client has an up to date will, particularly when there are dependents.
When ever your life changes a review is needed and “should” be done
An additional reason for a policy audit: trustees have a fiduciary responsibility to manage and review the assets held inside of a trust, including life insurance. And, juist as employers can be fined and subject to litigation, so can trustees.
Robert and Steve both excellent points and I appreciate you sharing.
Thanks Tim. It’s an eye opener for me. Will get a life insurance policy today.
Good for you Jun, don’t procrastinate!
Tim, you describe our family except the names are different. We did change our beneficiaries on my policy, but my wife is reluctant to talk about the inevitable. I am going to try to get her to read this. Thank you!
Jeff, if it helps one family it was worth my time to write the article. I sincerely hope this helps her see the light. Good luck!
Today’s “Modern Family” needs a vigilant Life Insurance Agent to make sure all the bases are covered. Excellent article that should encourage more people to check their old policies and more Agents to provide an annual checkup for their customers.
Life insurance concerns lots of people, marketing life insurance is very “interesting” for french insurures as my compagny … But different solutions may be also “interessant” for retirement solutions…And others do not want or can invest for these different solutions, included life insurance, “dear Tim” ! Other problem for our planet is really “ecolology”; everyone knows it; I hope ….