FAQs: What happens to my life insurance if my partner and I seperate?

We take insurance policies out our partners to mitigate the financial effect on our lives if they die or become ill. If I am the life assured, that makes my partner the policy owner. My partner receives the sum money my life is assured for if I die, and vice versa.

“If they own my life insurance policy, does ownership change when we separate?”

Your separation may or not affect the ownership of the life insurance policy. If a couple separate and there are kids involved then often the insurance stays in place and the ownership remains as it was for the benefit of the kids. Essentially, if my ex-partner dies, I am still affected financially.

It can get a bit sticky when the separation is not amicable. You don’t control your life insurance policy, so if you and your partner separate they can choose whether or not they want to shift the ownership.

“How do I get ownership of the life insurance policy when it’s owned by my ex! I now want it as my health has changed since I took the policy out originally and I could now be uninsurable.”

The short answer is you can’t. You don't own or control the policy the policy owner controls it.  As above, they can shift ownership to you if they agree to that.

The solution? Always get professional advice before taking out a life insurance policy and make sure you understand the ins and outs of the policy ownership.

Graham is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A Disclosure Statement is available free of charge upon request

3 steps to make post-break up financial decisions manageable

Working out financial details after or during a break up can be awkward and upsetting. This situation, while sometimes fraught, is definitely not uncommon! If you find yourself in this position, here are the steps you can take:

1. You both need independent legal advice

Depending on the length of relationship, if you’re married, or whether you have children, there will potentially already be lawyers involved. Not all solicitors do all types of law, bigger firms will generally have a cross section of specialist solicitors that you can draw on. You’ll need to decide who keeps your current solicitor, and who goes to another lawyer for independent legal advice.

If one of you wishes to purchase the house you both currently own, or one or both of you wish to purchase other properties once current home is sold, you need to confirm how profit/equity will be divvied up.

The law has some very strong views on who gets what (which may differ from your opinions), if there had been a relationship property agreement drawn up, or if the property is in a trust, there are still plenty of questions for your solicitor.

2. When you decide to purchase, the bank assesses your current position

After the above is confirmed, the bank then reviews your current position based on your...

●      Deposit

●      Income (note if Child Support, is not set up through IRD, banks may not use this in you income calculations)

●      Debt levels

3. Talk to a financial expert sooner rather than later

We specialise in helping people navigate all the layers of property acquisition. We can answer questions like: What is happening in the housing market? How do I make an offer? Can I use KiwiSaver?

There are a lot of moving parts, so have a conversation with us when you know a decision needs to be made around your current property(s), let us lower you anxiety, and bring you one step closer to inner peace!*

*Lance does not have the ability to bring you inner peace.

Lance Shearman is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A Disclosure Statement is available free of charge upon request.

From Facebook to your Mortgage: What happens when you die?

You’ve possibly already thought about some of the more obvious things like your house, your car and your family. But what about your bank accounts? Or even your Facebook profile? Wrapping up your whole life is not a simple task as Alex explains.

What happens to my mortgage and bank accounts when I die?

When you pass away the bank requires you (as the other party of the contract) to pay back lending in full before any property or money is distributed to beneficiaries.

All bank accounts and overdrafts are immediately stopped. Payments to the bank for interest and fees will still continue from the same account to avoid defaults. Then your estate needs to service the loans in the interim from those accounts. When you co-owned the property, the ownership can be transferred solely to the surviving owner.

Business accounts are a bit more tricky and these will freeze instantly as the owner of them is no longer there. If there is a partnership they will be frozen well as the partnership ended upon the passing of the other partner.

It is very wise to update your lawyer 

What about my Facebook account?

When you die, nothing automatically changes to your Facebook – but as soon as Facebook knows that you are no longer with us (and boy, do they know) there are a few options that you can choose:

1. Leave it as it is

You can, of course, leave the account as it is. This is not recommended as it means your data is guaranteed to be 100% secure.

2. Memorialise your account

Your loved ones can ask for your Facebook account to be memorialised by completing a memorialisation request and providing a scanned copy of the death certificate. Once the account is memorialised, no content can be altered or removed and the account is effectively locked down to eliminate any chance of being hacked. Only legacy contacts (your ‘digital executors’ can post on your behalf (for example, to give friends and family details of a memorial service). Friends and family can still post on your timeline to share memories.

3. Delete all data

Facebook only allows immediate family members to request all your data be deleted. They process this as a special request, and it requires scanned documentation as proof of your death. You can download all your Facebook data at any time if you wish to keep back ups.

Of course, that’s not even the half of it!

Come and have a chat to us or make an appointment with your lawyer to talk about it more. We’ll help you take charge by working out what might be the best option for you – and getting it down in writing.

Alex Barendregt is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A Disclosure Statement is available free of charge upon request