A Divorce Decree Failure to Survive Case Study

Petersen International’s Failure to Survive product provides a simplified-issue death benefit on a term chassis to customers who need coverage quickly or who are not eligible or the right fit for traditional term insurance.  Typical uses of the insurance are for third-party key person situations, to indemnify buy/sell agreements and other business contracts, divorce decrees as well as satisfying lender requirements for business loans.  To provide further insight and understanding of the product, here is a divorce decree Failure to Survive case study:

Spouses were ending their marriage and as part of the divorce decree laid out by the representing attorneys and agreed upon by both parties was a $500,000 term insurance policy on the life of the ex-husband.  The ex-wife was to be named beneficiary of said insurance.  Unfortunately, the tasked insurance agent was hitting roadblocks with every carrier he contacted about the case and each formal submission came back as a decline.

Reasons for the declines stemmed from the 57-year-old proposed insured’s alcohol abuse history and his current treatment for hypertension and diabetes.  And although both were controlled at the time by medication and changes in diet, traditional-market underwriters were balking at the overall history of the ex-husband.

From a general underwriting perspective, this was a tough impaired-risk case without much of a comfort level even by specialty-market standards. The advisor reached out to Petersen International with the inquiry.

We were able to accept the risk with a diabetes exclusion and provide them with a Failure to Survive simplified-issue term policy with a $500,000 face amount.  The ex-wife was the owner and beneficiary of the policy satisfying the requirement of the contractual divorce agreement.  The policy was underwritten and issued in less than two weeks.

Don’t let insurance company declinations or underwriting timetables stand in the way of providing your clients with the insurances they require.  Please give us a call at (800) 345-8816 to learn more about the Failure to Survive line of products including divorce decree indemnification.