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Retiring Abroad? You Might Invalidate Your Life Insurance

29 Nov
Maldives Resort (Wikipedia)

Maldives Resort (Wikipedia)

While reviewing life insurance policies, I noticed that some have a clause which would make it impossible for your family (or other named beneficiaries) to collect your life insurance benefits if you are residing outside of the United States when you pass away.

In the past decade, the number of Americans retiring in sunny locations abroad has increased, and is expected to multiply further as baby-boomers retire. According to the Wharton (business) school at University of Pennsylvania, in 2012 there were 350,000 Americans collecting their social security retirement benefits abroad. The travel industry estimates that an additional 3.3 million baby-boomers are planning to retire abroad.

If you are planning to retire abroad, check your life insurance policy for a residency requirement.

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Who Can I Leave My Life Insurance Benefits To?

2 Sep
Michael Jackson

No, You Can’t Leave Your Benefits to The King of Pop

Short Answer:  Anyone

But there are some limitations. Look out for these:

  •  People Not Related to You – Typically you can leave your benefits to non-relatives, but in some states this is not allowed because those persons may not have “an insurable interest” in your life (a financial interest in the fact that you are alive). Check the rules of the state you live in.
  • Minor Children – You can leave your benefits to children under the age of 18, but this can cause problems. If you die when they are still minors, they will not be able to receive the money yet, and it will go through what can be a lengthy and complicated court process. Be sure to inquire with your insurance agent/broker or do some research before you list your minor children as beneficiaries.
  • “Husband” instead of “John Smith” – Try not to use the titles of people, like “husband,” rather than their given name, like “John Smith”. If you get remarried, the money could go to your EX-husband, which is probably not what you intended!
  • “Children” instead of “Susie, Billy, etc.” – If you simply write “to my children,” this can be interpreted as including only the children that were alive at the time you wrote “children”. Be safe – use their full names and don’t forget to add any children born (or adopted) later!
  • Your First Choice is Deceased – Be sure to provide a secondary (contingent) beneficiary, in case your first choice passes away before the benefits are paid.
  • Non-U.S. Citizens – This is okay, but your benefits might be subject to unexpected taxes.
  • Corporations or Other Entities – This is generally okay.

Unique Scenarios

To Your Kidnapping Victim*

James Lee DiMaggio kidnapped 16-yr old family friend Hannah Anderson after murdering her mother and younger brother. When California police found him, he committed suicide (thankfully, Hannah was rescued safely). Turns out, DiMaggio had purchased a life insurance policy and named Hannah’s grandmother as the beneficiary – and it seems he intended the benefits to be used for Hannah’s welfare. Is this legal? Yes. While the scenario is bizarre and tragic, to say the least, he was allowed to leave his life insurance benefits to his kidnapping victim (or her grandmother). However, his policy may be void because he committed suicide.

To Michael Jackson’s Children

Michael Jackson left the proceeds of his $20 million life insurance policy to his estate (the beneficiaries of his estate are reportedly his children). Unfortunately, his children only received $3 million, because there was a question about his cause of death. If his death was caused by a drug overdose, the policy may have been completely void. So, before his cause of death could be determined, Michael’s clever estate administrators quickly settled the policy for $3 million. Smart thinking! Three million is better than zero.

*Not Recommended! Kidnapping is illegal. Do not kidnap.

Insurance to Die For?

18 Aug

Happy Insured Family -OR- Husband and Wife Plotting Murder??  (Photo credit: Wikipedia)

We’ve all seen movies or crime shows where a disgruntled wife or husband has their spouse killed to get their hands on the life insurance money. I don’t need to tell you 1) this is a crime and 2) life insurance policies have a clause that voids the policy when this happens.

But that doesn’t stop people from trying!

Cathlene Wiggins:  Fake From the Start

Cathlene Wiggins of Virginia loved drama, and she loved money.

By the time Cathlene met Navy man Cory Voss, she had changed her name to Catherina, to sound more exotic. She told Cory she was Ukrainian. She had never even visited the Ukraine. Cory fell for her cheap lies, and before long, he was in love.

For the Love of Money

Catherina quickly became pregnant. She and Cory were married, and they had two children. Cory was a military man, so he was away from home for long periods of time. While he was away, Catherina became bored. She wanted to party and spend money. So, she drugged her children to make them sleep and left them home alone. She partied all night at local clubs. She took out new credit cards and spent lots of money. She had affairs with both men and women.

Cathlene Wiggins, Murderess

Cathlene Wiggins, Murderess

Then Catherina met Michael Draven. Michael told Catherina he was a movie producer and owned his own production company.

In fact, Michael was unemployed and lived in his parent’s basement.

Catherina and Michael started a torrid affair and spent all they money they could get their hands on. When they ran out of cash, they hatched a new plan to get some more. They would murder Cory for his life insurance proceeds. Cory’s life was worth $400,000.

Cory had to Die

Shortly after Cory returned from an assignment, Catherina and Michael set their deadly plan into action. Late one evening, Catherina asked Cory to go to the local bank and withdraw $60. She said she needed the cash to pay for the kid’s lunches the next day. Cory agreed, and drove to the bank.

At the bank, Cory drove up to the ATM and inserted the card. He tried to withdraw the $60. Access denied – insufficient funds. Cory didn’t understand. He tried again, this time for $40. Again, insufficient funds. This was strange – Catherina said there was money in the account. He tried one last time, for $20. Insufficient funds. This would be the last transaction of Cory’s life. A man threw open the passenger side door and pointed a gun at him…

Cory Voss, the Victim

Cory Voss, the Victim

Murder for Hire

Cory’s body was found the next day in a nearby parking lot. Nothing of value was stolen from the truck. Cory had been shot FIVE times. The police were immediately suspicious. Multiple shots typically indicate that the crime was personal. The killer knew the victim.

Police interviewed Catherina. She played the grieving widow very well, but something didn’t seem right.

Meanwhile, Catherina and her lover were contacting the insurance company. They wanted to get their hands on that insurance money.

As soon as the insurance check arrived, Catherina and Michael jumped on a plane for a lavish tropical vacation. Police were watching them.

By the time police had enough evidence to arrest the wicked lovers, they had already burned through nearly $100,000.

Jail for Life

For the murder of Catherina’s husband Cory – Catherina, Michael, and the hit man were all sentenced to very long prison sentencesMoral of the story?  Insurance fraud doesn’t pay.

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