I Have Life Insurance On My Ex-Husband

Summary

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Episode Overview

Theme:
This episode of The Ramsey Show Highlights centers on a newly married woman dealing with the complexities of carrying a life insurance policy on her ex-husband. The discussion explores the financial, emotional, and practical aspects of maintaining such a policy, particularly from the perspectives of child welfare, remarriage, and personal finance philosophy.

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Key Discussion Points & Insights

1. Caller’s Situation (00:08–01:42)

• Background:
  The caller shares she remarried three weeks ago, but still holds term life insurance policies ($500,000 each) on herself and her ex-husband, motivated by lingering child support and the financial needs of her twin boys.

• Key Motivation:
  She wants to ensure her 14-year-old twin sons are financially secure if anything should happen to her ex, especially as they approach high school and college.

• Marital Tension:
  Her new husband feels uneasy about paying premiums for the ex-husband, unsure whether it’s appropriate but not outright opposed.

  “I want to make sure my kids are taken care of...but on the flip side of that, I also want to respect my [new] husband's decisions and follow his lead.”
  — Caller (00:32)

2. Advisor’s Perspective on Insurance Purpose (01:42–03:26)

• Financial Advisor’s View:
  Insurance is primarily to replace income when dependents (like children) rely on that person’s earnings.

• Child Support Context:
  The connection to the ex-husband now mainly revolves around his role as a father, not a former spouse.

  “The only piece of this that I could see a connection to is the kids…And them being the beneficiary makes sense...If that’s something [your ex] wants to do from a legacy perspective.”
  — Financial Advisor (02:09)

3. Family Dynamics & Policy Logistics (03:36–05:23)

• Ex-Husband’s Health:
  Policy was hard to get due to his health, furthering the caller’s concern for her sons’ future security.

• New Husband’s Assurance vs. Reality:
  While her new husband (a truck driver) wants to support the boys, the family income is limited; as a teacher, she emphasizes the importance of educational opportunities for her children.

• Policy Ownership:
  Caller is both the owner and beneficiary of the ex-husband’s policy, though the ex does not appear actively involved or even aware of the arrangement until recently.

  “I am the policy owner...I guess I am the beneficiary of the policy. I always have been. So I don’t even think he even remembered he had...the life insurance policy until the other day when I called and talked to him about it.”
  — Caller (05:00)

4. Expert Analysis: Not About the Past, But the Kids (05:23–06:13)

• Intent of Keeping the Policy:
  Experts clarify maintaining the policy isn’t about clinging to a past relationship, but about securing the children's future until they become financially independent.

• Divorce and Blended Family Realities:
  They acknowledge the discomfort for the new husband, calling it part of the complexities of blended families.

  “The main distinction is you are not hanging onto this policy to hang on to the past. You’re hanging on to it to protect your kids’ futures.”
  — Financial Expert/Advisor (05:23)

  “That’s just part of what [your new husband] signed up for. Yeah, a little bit of this discomfort and messiness.”
  — Financial Expert/Advisor (05:56)

5. Life Insurance Principles & Recommendations (06:13–06:53)

• Policy Justification Recap:
  Advisors stress life insurance’s purpose is to protect dependents by replacing lost income.

• Rule of Thumb:
  Recommendation to carry 10–12 times yearly income in life insurance for dependents, and that policies aren’t needed for children.

  “The purpose of life insurance is to take the place of income that people are dependent on. So you don’t take out life insurance policies on children. You take them out on working individuals.”
  — Financial Advisor (06:31)

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Notable Quotes & Memorable Moments

• Caller (00:32):
  “I want to make sure my kids are taken care of...but on the flip side of that, I also want to respect my [new] husband's decisions and follow his lead.”

• Financial Advisor (02:09):
  “The only piece of this that I could see a connection to is the kids…And them being the beneficiary makes sense...If that’s something [your ex] wants to do from a legacy perspective.”

• Caller (05:00):
  “I am the policy owner...I guess I am the beneficiary of the policy. I always have been. So I don’t even think he even remembered he had...the life insurance policy until the other day when I called and talked to him about it.”

• Financial Expert/Advisor (05:23):
  “The main distinction is you are not hanging onto this policy to hang on to the past. You’re hanging on to it to protect your kids’ futures.”

• Financial Expert/Advisor (05:56):
  “That’s just part of what [your new husband] signed up for. Yeah, a little bit of this discomfort and messiness.”

• Financial Advisor (06:31):
  “The purpose of life insurance is to take the place of income that people are dependent on. So you don’t take out life insurance policies on children. You take them out on working individuals.”

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Important Timestamps

• 00:08: Caller shares her marriage and life insurance context
• 01:42: Advisor frames insurance purpose and children’s needs
• 03:36: Discussion of ex-husband’s health and family finances
• 05:00: Caller clarifies ownership/beneficiary details
• 05:23: Expert underscores the distinction between past and future
• 06:13: Core life insurance principles reiterated

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Summary Takeaway

The episode addresses the sensitive balancing act between respecting a new marriage and providing for children from a prior relationship. The consensus: maintaining a term life insurance policy on an ex-spouse is justified when it directly protects dependent children. The discomfort for a new partner is acknowledged, but the financial well-being and future of the children remain the priority until they're independent.

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Transcript

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[Caller (Newly Married Woman)]

the good news is I got married three weeks ago.

[Financial Advisor]

Oh, congrats.

[Caller (Newly Married Woman)]

Thank you. We have a situation where my husband and I need some guidance on. So before this marriage, I was married before. I've been divorced for about eight years now. In my first marriage, I took out a life insurance policy on me and one on my ex husband. There are $500,000 term life insurances on each of us. After the divorce, I kept the life insurance policy on both me and him because he was paying child support and other expenses and if something were to happen to him, you know, it would be difficult. So anyways, with that, my new husband, he's like, he says it feels weird to pay life insurance on my ex husband. He's not 100% against it, but he's not 100% for it and he doesn't know what to do. But then on the other hand, you know, I want to make sure my kids are taken care of because we have a set of 14 year old twin boys who are about to go into high school. You know, we're staring down college. You know, there's just so much going on at this stage in life and if you, I want to make sure something were to happen that they're taken care of. But on the flip side of that, I also want to respect my husband's decisions and follow his lead. But then he's like, he's like, he doesn't know what to do. So we're like, so go ahead.

[Financial Advisor]

I can see two sides of it. I can see how, I'll tell you how my brain is seeing it. Obviously the purpose of insurance is to replace income. That's necessity. Right? So before you were married, obviously, yeah, this guy was, you know, you were married to him. So he was part of the income situation. And then even as an ex, maybe he was paying child support or alimony, that sort of thing. At this point, now you're married to somebody else. There's kind of a new situation going on financially. The, the only piece of this that I could see a connection to is the kids. And if your, if your ex husband was saying, hey, this is kind of an inheritance thing, when something happens to me, I want the kids to have this money. That piece I can totally understand. And them being the beneficiary of that makes sense to me. If that's something that he wants to do from a legacy, legacy perspective. And as your current husband, I don't know that, that should bother me to that extent because this, this is their dad. So how are you guys viewing it? Is he viewing it from more from a marital perspective or more from a children's dad's legacy perspective?

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[Financial Advisor]

So how are you guys viewing it? Is he viewing it from more from a marital perspective or more from a children's dad's legacy perspective?

[Caller (Newly Married Woman)]

Well, Mike's or his, his health. It was difficult to get the life insurance to begin with. And like, he had gotten rejected multiple times over the course of the times we have tried. And so his health is not great as we speak. And then. So I also got that in the back of my mind. And then. But my new husband, he's like, you know, he's a truck driver, so he makes pretty good. And, you know, he's adamant that, you know, these are his kids, he will do whatever he can to take care of them. But the fact of the matter is, you know, he's a truck driver. I'm a teacher. There is only so much money that we make. And with being a teacher, education is important to me. So I want that option to be there for my kids to be able, if they want to, to go to college, to whatever college. So

[Financial Advisor]

if your ex husband said, I want you guys to keep this policy, and the purpose of it is for the children's college, and if my life exceeds that, then it's there for them, you know, as they begin their life and start their life, then I, I think that's a wonderful thing. And I hope that he has a will and some documents that can really outline some of those things that he wants for his children. Um, there's part of this, the policy.

[Caller (Newly Married Woman)]

I am the policy owner. I got it through. So I'm the one who's always pa.

[Financial Advisor]

And you're listed as the beneficiary.

[Caller (Newly Married Woman)]

I guess I am the beneficiary of the policy. I always have been. So I don't even think he even remembered he had. We had the life insurance policy until the other day when I called and talked to him about it.

[Financial Expert/Advisor]

Well, the main distinction is you are not hanging onto this policy to hang on to the past. You're hanging on to it to protect your kids futures.

[Financial Advisor]

Right.

[Financial Expert/Advisor]

So until they are independent on their own, they're through college, they're working okay? Now they're fine. But right now the truth is, let's say you got rid of this policy. Well, you might not be able to afford college and support them. And so part of having kids is it's your obligation to support them. Now, that might be through child support, that might be because you want to, but I would keep it for that reason. And it really has nothing to do with, you know, the new husband. The new husband, yeah. And so I totally understand his side of it. So I don't want to diminish that. And it is uncomfortable, but that's the nature of a broken marriage and kids from a, from a different father. That's just part of what he signed up for. Yeah, a little bit of this discomfort and messiness.

[Financial Advisor]

And if, I mean, I'm, I'm trying to put the shoe on the other foot. If for some reason my kids, I was separated from them through, you know, a divorce, I would, I'd want them, I'd want them to still have life insurance on me so that they have access to whatever money I've accumulated or, you know, obviously get that death benefit if, if I were to leave this earth. So I can totally, totally understand it. And it's just a good lesson, guys. Life insurance is so important. I said it earlier, but I'll say it again. The purpose of life insurance is to take the place of income that's people are dependent on. So you don't take out life insurance policies on children. You take them out on working individuals. And we always suggest 10 to 12 times your yearly income is what you would need.

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