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tdlawyer, Lawyer
Category: Family Law
Satisfied Customers: 1096
Experience:  Lawyer with 9 years experience of family law issues.
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My parents want to take out a life insurance policy on my wife.

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My parents want to take out a life insurance policy on my wife. She legally owns the house that they are renting from her and want to take out the policy so that they get the mortgage paid on her death. However, as they are not financially dependent on my wife, is this legal?

tdlawyer :

Hi thanks for your question. My name isXXXXX can assist with this.

tdlawyer :

Yes, this should be possible. In a way, they do seem to be financially dependant on her in the sense that unless she owns the home, they may lose their ability to reside there.

tdlawyer :

You're right to recognise that there needs to be an "insurance interest" but there does appear to be such an interest in this case.

Customer: In fact, she just got the mortgage for them in her name as they were unable to get one and they make the repayments through her bank account. Her will, however, leaves the property to me in the instance of her death. Therefore, are they financially dependant on her?
tdlawyer :

Can you not just do this another way and avoid the issues at all? How about if your wife takes out a life policy, then leaves the benefit of that in her will to your parents?

tdlawyer :

Because I do see your point and the last thing you want is an argument over this at a later stage.

Customer: I completely agree. The reason for the question is that we find it very disturbing that they want to do this and the fact that they are officially only tenants would mean no financial dependence. Otherwise couldn't any tenant take out life insurance on their landlord?
tdlawyer :

Yes, I see your point. I had thought the position was slightly different when you made the initial question, so I do agree with you.

Customer: So you are saying that they have no basis for taking out a life policy on her?
tdlawyer :

Yes, I think that's right. I don't see the insurable interest in the circumstances.

tdlawyer :

Essentially, they're just tenants, are they not? Even if they owed her money, her death doesn't change that, as her estate simply becomes entitled to the debt. Its not like them passing and needing the cash sum to pay off their debts.

Customer: Many thanks indeed for your help. I will, of course, give you an excellent rating.
tdlawyer :

Thank you very much :)

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