Life insurance question

[NobbyNobbs]

I'm never in this section of the forum, but I have a question that maybe those here can help with. Here's my situation.

I have ALS. It's a terminal disease, with an indeterminate life span. I am married, with young kids. I live in Pennsylvania. I work for the federal government. I have the basic life insurance policy offered, and no more. When I got it, who knew? Now, of course, it's a problem.

There are only two ways they will let me increase my life insurance. One is to wait until the insurance company decides to hold open enrollment. There's no way to predict that. The last one was in 2004.

The other way is if I experience a "life changing event". Apparantly, having a terminal illness doesn't count. What does count is having or adopting a child, getting married, getting divorced, or the death of a spouse.

We have kids, and my wife has had her tubes tied. Even if we wanted another, we couldn't afford it. So that's out.

We're already married. Bigamy is still illegal, so marriage is out.

I'd rather not kill my wife if I can avoid it.

Which leaves me with the wacky thought in my head of, "Can I get divorced, increase the insurance, and remarry?"

My questions: Is this legal? Is it fraud? Is it expensive? Is it a long process? Is it advisable?

Should I wait a week and try again with a clear head?


Thanks in advance for all your information.

 

[Seanette]

I would definitely vote for "wait a week and try again with a clear head". I'm reasonably sure an insurance company would find the proposed divorce/increase insurance/remarry sequence rather suspicious, especially if they were to get wind of your illness (which I'm very sorry to hear about), and could construe that as fraud so as to invalidate the insurance you already have.

 

[Soapy Sam]

Lawyers would get involved.
You have more chance of a miracle cure at Lourdes than you have of winning this way.

No. Time to face facts. You have to bump off the wife.

 

[NobbyNobbs]

Lawyers would get involved.
You have more chance of a miracle cure at Lourdes than you have of winning this way.

No. Time to face facts. You have to bump off the wife.

Yeah, I was afraid of that.


"Honey, could you bring that lye back in here, please?"

 

[NobbyNobbs]

Seriously, are there other options I'm missing? Or am I royally screwed?

(Actually, I *know* I'm screwed. The real question is, is my family screwed too?)

 

[Loss Leader]

Your best bet is to self-insure by maxing out your contributions to your 403(b) and your children's 509 plans. Another good planning tool would be a Roth IRA.

You'll need a will and an elder-law attorney to help make sure that you've got all your designations right as well as to ensure that you don't accidentally just give your kids a bunch of money when they turn 18.

Find a NAELA-member lawyer in your area who is also a CELA, certified elder law attorney.

 

[madurobob]

Sounds to me like what you're proposing is fraud. I think a more realistic option is one of the several no-exam term life policies. Tho even then lawyers might get involved if they figure out you took out the policy knowing you had ALS. Read the fine print.

And, I'm very sorry to hear about your ALS.

ETA - now that I think of it, your current insurance company would probably balk at paying out the higher coverage if they figured out you bumped up the coverage post-diagnosis. So, even the fraud option has a low likelihood of success.

 

[NobbyNobbs]

Thanks. I'll take what Loss Leader said to someone for translation. I'm a complete blithering numbskull when it comes to anything finance.

I started a thread in Community when I was diagnosed. It's called "Facing Mortality". I haven't posted to it in awhile, but maybe I should.

 

[madurobob]

I'll bet your local ALS society has a free estate planning arm. That'd be a good start.

I think what LL is saying is in lieu of additional insurance premiums max out your contributions to retirement accounts and educational savings accounts for your kids. Then make sure your estate is set up properly to care for your family. One common way is to have the insurance proceeds create a trust with your wife as trustee and the kids as beneficiaries. The trust pays out maintenance income to take care of the kids while they are kids, then any principle left over goes to the kids once they are adults.

 

[roger]

I'm not a lawyer, but should we be making jokes about fraud in a public place? Not to be macabre, but what if Nobby's wife falls on the ice tomorrow?

 

[Loss Leader]

The trust pays out maintenance income to take care of the kids while they are kids, then any principle left over goes to the kids once they are adults.

Forget about paying your kids once they become adults. A person becomes an adult at 18. Would you trust an 18 year-old with money?

I usually write trusts that dissolve when the child turns 25, 30 or even 35. Heck, I've written trusts that never end. My uncle (a notorious drug addict) receives income from a trust and he is 61 years old.



Also, I may have meant 529 instead of 509.

 

[Ysidro]

I'm not a lawyer, but should we be making jokes about fraud in a public place? Not to be macabre, but what if Nobby's wife falls on the ice tomorrow?

Then we'll be upset but it will still be very very funny.

 

[madurobob]

Forget about paying your kids once they become adults. A person becomes an adult at 18. Would you trust an 18 year-old with money?

Good point, but if that kid is going to college they may need that full principle. I s'pose you could write the document such that liquidation of principle is OK to fund higher education, but not OK to fund drunken partying (but you might not be able to tell the diff if you're doing it right!)

Also, I may have meant 529 instead of 509.

Pretty sure you did, too. In fact, I read your initial post as "529" and had to double check. Funny how we read what we expect to see, rather than whats really there.

 

[fezzic]

NN might check and see if there is the "gotta live a certain amount of time before the policy benefits kick in" option on life insurance, such as term stuff. It will probably be pretty expensive for NN's age because of the diagnosis but it is a possible option.

My brother in law had a congenital heart problem. He got life insurance but had to live like a year or two years before the policy benefits would go into effect. Unfortunately, he died a very short time before the time limit was up. My sister only got the premiums he paid back.

 

[NobbyNobbs]

I'm not a lawyer, but should we be making jokes about fraud in a public place? Not to be macabre, but what if Nobby's wife falls on the ice tomorrow?

Guess I better check what her life insurance policy is like then, huh?



(You gotta understand, I have to joke about it. If I didn't, it would probably drive me crazy.)

 

[Jeff Corey]

Lossleader #6 and Madurobob #9 seem to make the most sense.
Not a lawyer, just an opinion.

 

[bigred]

NN so very sorry about your situation. My own take FWIW is do not try this "trick" of a divorce/remarriage. I strongly suspect you will create more trouble, not less.

I would hope even your basic coverage would cover things for your family for at least awhile.....short of that if you wife doesn't work I would get her in that mode soon as possible, and/or look at way to maximize her earning potential. Very best to you regardless.