Joint life insurance with my ex wife

[Solanacea]

I am hoping that someone could help me in resolving a problem that has reached crisis level. I have been married three times. In 2004 my second wife and mother of our two children and I separated. After a messy first divorce neither of us wanted to involve lawyers and we agreed to an amicable divorce. We agreed to carry on paying into two endowments and a joint life policy with profits until mature. In 2005 I met my third wife and we married in July 2009. In 2008 my ex moved to the US with the two boys, now aged 17 and 20. I was very upset about this, but was able to deal with it, and speak to them weekly, and they come over once or twice a year. My new wife has developed a hatred of my ex, and whereas I feel I have moved on, she finds any mention of her intolerable and usually triggers a row. The reasons are too complex to go into here. Such a row happened yesterday when a letter from the insurance company arrived addressed to me and my ex. I explained to my wife that the company had carried out a review and wanted to increase the premium. She became angry on discovering that if I died then my ex would receive the insurance payout. I pointed out that if my ex died I would receive the payout but this she said was immaterial because she would not trust my ex to do the decent thing and pass this to the boys ( which is what I would do). Things got very heated and she has left for work saying that unless I cancel the policy ( which I was going to do because the terms dont stack up anymore) and say that it is wrong for a married man to have joint life policy with his ex, she will leave me. This feels like bullying and a forced confession. The financial arrangement I have with my ex is based on trust. I hold savings accounts and an ISA which are used for the boys education. We have as joint account which we both pay into monthly and this pays the premiums for the endowments. I have no reason to doubt the fairness and honesty of my ex in this regard. However, it is important to stress that I only communicate with her on a need to basis, usually about the boys, their education and travel arrangements etc. I last saw her three years ago, we dont speak on the phone, and e-mails are neutral in tone.
So am I naive, lack empathy and understanding? How can I reassure my wife, who I love very much, that I have no emotional attachment to my ex, that having financial arrangements with my ex does not mean anything other than it was mutually financially beneficial to continue these, and that my children will benefit indirectly.
Any advice?

Did you pay maintenance? If so, did the ex spend it on the children? If not, can you be sure they will benefit? If she's selfish enough to take them thousands of miles away I'd back out

kens123
I did pay maintenance, but when she moved to the US with her new husband, this was waived as I pay for the boys flights to England and back. Yes, I did think she was selfish, and this has contributed to my wife's resentment. I personally cannot live with grudges and resentment, and accepted the situation, and moved on emotionally. I know that any money I provide does go my sons.

I dont think you lack empathy and understanding at all. Your current wife seems to be behaving very unreasonably in all of this. Is she usually this insecure? If you havent spoken to your ex wife in 3 years I find it hard to understand why she hates her so much and is so insecure about this.

On a practical level, if you cancel the policy now you will lose all of the premiums you have already paid in respect of this policy which I imagine would be a fair amount and also your boys would lose a very substantial sum on the event of your deaths which could really help them secure a future. Is it worth doing this just because your current wife hates your ex? Also, its really none of her business what your ex does with the money if you were to die first, as it's your ex's policy. She is the one contributing to the premiums. Im sure in one way or another your children would benefit.

Have you got any provision for life insurance with your current wife? If not, maybe it would help if you set up a policy for her so that she would also be covered.

You may be able to wrap a trust around this existing policy to make sure the payment goes to your children in the event if death. V easy to do, any IFA could help you.

However the fact she's abroad may make this tricky. Professional advice required. Get an IFA from www.unbiased.co.uk

Presumably if the joint policy is a "with profits" policy, it is a fixed term policy with a savings element.

If you took it out when your children were small, it may not have that many years left to run, and the value of paying the last few years may make the increased premiums worthwhile. You need to do some sums.

There also used to be a market for partially paid endowments policies, which may be worth looking into, if you decide not to continue the payments.

If it is a valuable policy it might be worth getting advice from a financial advisor before making a decision.

Your current wife sounds very insecure. After all, if she has your children, the likelihood is that they will also be financially well treated.

I wouldn't be happy having DH's ExW on his policy. He has something in the kids' interest that would go into trust if they're under 18 IIRC but I'm the main beneficiary/in the process of this happening.

To be honest I think it'd be a deal breaker for me as well and I have a good relationship with the ExW. It's not about trusting the ex to do right by the kids, it's saying that the current wife isn't trusted to.

Simone. Thanks. This policy has very little profits and actually worth less now than 10 years ago, surrender value is about £600. The main thing is that the company want to raise the premium fourfold to maintain the same cover - just doesnt stack up. I do have life insurance in my own name ( at much better terms) , and this and all my pension/death benefits will go to my wife in the event of death. She would be well off.
I believe that this is all about my wife's insecurity, but she will never acknowledge this, and maintains it is "wrong" to have such an arrangement.
Tigresswoods - thanks but not really worth it given the circumstances.
Should say that we are both contributing to an HE fund which I control, which reflects the mutual trust I suppose.

Yes but waiting, this was something that was in place before the OP met his current wife. It just doesnt make financial sense to cancel the policy just because of the current wife's insecurity. How does it reflect on the trust he has for his current wife?

OP, if your wife wont listen to you re this maybe it would be worth taking her along to a meeting with an independent financial advisor who can advise you both impartially on your joint finances and the best way to resolve this.

Simone. The finances are a red herring here. The issue is about whether it is OK for a man to have such an arrangement with his ex wife. My wife says that she feels that any new wife in these circumstances would object as it constitutes an unacceptable link and is tantamount to being unfaithful.

I am surprised this wasn't discussed before you got married. My husband and I discussed all our previous financial commitments (both married before with kids) and decided which we wanted to keep on.
I suspect alot of your wife's anger is because you kept this secret from her for 3 years as much as anything.
My husband had a joint insurance policy with his exwife, it was transferred over to him and finishes next year, we won't be renewing it as his kids will then both be over 18 and life insurance is a rip off.

Well I can honestly say I would have no problem with this. You have children to consider and there is no reason for your DW to feel insecure about the relationship with your ex as you have no or very limited contact and she lives thousands of miles away. I would look at it from a very practical point of view but then I do work in financial services so know just how important it is to have provision for your family after you die.
I dont know how she can possibly say it amounts to being unfaithful, its a purely practical arrangement for the benefit of your children. However, thats just my opinion and obviously its your wife's opinion that matters in your case and I dont know the backstory!
Hope you sort it all out.

2rebecca.It was discussed, but I described the policies as endowments that matured in 2013. The policy I have been talking about is essentially life insurance with a small sum accumulated, so I generalised and said 3 endowments. Not a secret, just didnt spell it out. My wife is fully aware of the overall arrangements, although they annoy her, but agreed that they would continue to 2013.

Simone. Thanks

I have sympathy with your current wife and understand why she's angry. I see no reason why you need these policies - you have own life insurance, your ex is remarried and not in need of your financial support. Cancel the policy and invest the monthly premium for your kids' future.

It's just not worth risking the relationship you have with your current wife for the relationship you had with your ex wife.

[I am in a not too dissimilar situation in that my DP's divorce settlement states clearly that his ex should receive his work related next of kin benefits indefinitely (i.e if he re-marries then he must continue to fund these benefits which include, amongst other things, life insurance).]

My H and I are in the same position, in that his ex-wife returned to the US with their children. However this was many, many years ago.

I would not have been happy to discover this sort of financial arrangement. Perhaps it is the symbolic significance so not entirely a rational response but hey...relationships are not all about rationality. Depending on what else was going on in my marriage it is likely that I could have been very angry.

In essence, I completely understand your wife's emotional response.

I can understand the financial sense of your arrangements and see your point of view in general.

However, one point I would raise is that you seem extremely sanguine about the emotional situation here. That's great, as you say you have moved on, that's your decision and is certainly in one sense a very healthy approach. Your wife feels differently, and so you view her opinion as clouded in some way, jealous, unreasonable. However it strikes me that hers are the more normal feelings, I have to say!

You are the one who strikes me as unusual in your response to your ex taking your children so far away. To be frank, your ex does not sound like a very nice person. I'd maybe suggest that you start from a position of considering that your wife actually has a point when she gives an honest reaction to how she feels about your ex. A lot of people would agree with her. It follows that she sees your ex as a thoroughly selfish person who cannot necessarily be trusted to do the right thing either by you OR her children. It wouldn't have been in your childrens' best interests to deprive them of a regular relationship with their father. She acted in her interests to the detriment of your children.

Money brings out the worst in people. Personally I think you are misguided to have ANY arrangement based on 'trust' with a person who would think it was morally ok to move your children thousands of miles away from you. And if I were your wife I would be angry about seeing my husband's selfish ex afforded such trust. Yes it would to me indicate an ongoing affection.

Don't confuse your acceptance of this situation with 'reasonableness' on your part. Sometimes it's not always the more 'reasonable', 'calm' person who is in the right!

Tie up the situation legally so that your children benefit and any arrangement with your ex is NOT based on trust, and I predict that your wife will feel happier and more inclined to respect your arrangements.

origamirose. The only reason for continuing this policy was that cashing in at the time would have been a bad deal. In hindsight I would have been better off as its performance in the last 10 years has been rubbish. I have just phoned to cancel!

Thec..foot. Thank you for such a thoughtful reply. I think the age of the kids is relevant here - they were 14 and 16 when they went to the US. They lived in the next village, spent weekends with me and I did lots of cricket and rugby with them, so it was a huge wrench. But they were given a choice about going, and I have to say they have a very good quality of life. I was upset, but the only way I know of dealing with this is to come to terms with it, and move on. The relationship with my ex did change fundamentally though. I am now polite but not friendly when I e-mail. As far as trust goes, my ex trusts me with several thousand pounds of money saved for HE, to which she has contributed equally.
All this sounds as if I am supporting my ex against my wife. That is not true. What I want to get across to my wife is that these are time limited arrangements, that were put in place to benefit all parties, and that there is no emotional significance to them at all.
If it helps to understand my feelings and actions, I am a senior manager and line manage quite a few people. I feel that I have a lot of people skills, and can listen and empathise and get good feedback from my staff. I just dont seem to be able to get past first base on this issue at home though!

Underfoot - good response.

I think you should have spelled out your financial arrangements before getting married. Before my husband and I married we showed each other the details of all pre-existing policies. I wouldn't have been happy with the vagueness of your financial disclosure, but then I'm probably better with money than my husband is and am used to dealing with financial stuff.
You knew your wife didn't like your exwife yet didn't mention the details of this policy.
Had you said before you decided to get married "this is an arrangement I have with my ex, I'll be keeping it until 2013 as it would be a waste of money to cancel it" she would have had to accept it, or you could have waited until 2013 to marry, or ditch the policy.

"On a practical level, if you cancel the policy now you will lose all of the premiums you have already paid in respect of this policy"

That's nonsense. Life insurance doesn't work that way. You are free to cancel the policy at any time and take out a new one. What is to stop you taking out a single life insurance policy of your own to provide for your sons in the event of your death. In most cases a life insurance policy will expire before death and there is no benefit. No difference whether you are 17 years into the policy or 2 months, the benefit is the same.

My husband's life insurance is with profits and he would have lost money had he totally cancelled it, although in retrospect had we changed it we could have used the money against our mortgage and probably got a better return in the past few years. The letters used to come here addressed to him and his exwife even after he had changed the benefit arrangement so all money comes to him, something to do with policy names not being changeable.

2rebecca. I think that the situation has deteriorated since we first discussed these arrangements long before we were married. It now only takes an envelope to come addressed to my ex, to make her angry. The hatred she feels for her just seems to grow. The trigger yesterday was that when we read through the letter from the insurance company, we saw that the ploicy was not time limited to 2013 as I had believed, so the thought of continuing the policy beyond 2013 and therefore continuing the financial arrangements pushed her over the edge and led after a lot of arguing to her ultimatum

If this is a joint policy withyour ex that she pays in to did you check with her before cancelling as I would have expected cancelling it to be a joint decision? I'm getting the impression you don't do joint decisions.

2rebecca.I have sent my ex an e-mail outlining the case to cancel and asked her to confirm the decision. I cant see her saying no for the reason that it is now a poor deal. The company are sending me forms to put it in writing. I am told that there is £690 surrender value which I will split with my ex. There was nearly £2k a couple of years ago, but I was told that they have dipped into this to pay premiums. What a rip off!