Why you should buy life insurance for your Co Parent or Ex Partner

Co Parents need life insurance and this is why

While you might not be together romantically, raising children together leaves Co Parents financially connected in many ways — whether you want to acknowledge that or not.

Remind me again what is Co Parenting?

The term Co Parenting was traditionally only used to describe a situation where a parent had split from their previous partner following a separation or divorce, but who were still actively involved in the lives of their shared children.

Jump Ahead

Welcome to the modern family

Today, Co Parenting is also another way of creating a family for many gay, lesbian, or gender diverse people often because it’s a way of having your own biological child.

It's also a way to be actively involved in the life of a child along with other adults committed to helping you grow a happy child.

Talking about what matters most

Whether you’re Co Parents by choice happily sharing parenting responsibilities, or Co Parents by circumstance post separation, having a life insurance policy on each of your lives, protects your child from the financial effect of losing one (or more) of their parents.

Having open and frank conversations about these realities of life we all face is just another part of putting the needs of a child first.

A life insurance policy is essentially designed to help protect the nominated beneficiary from the financial impact that losing a parent will bring.

• You may have particular plans for the child you Co Parent that require financial security.
• You or your child may still depend on a former spouse financially.
• If you receive maintenance or child support after a divorce, remember if your ex-spouse dies, that income would disappear.

Ultimately the loss of one parent will increase the financial responsibility of the surviving parent - and usually at a time when finances are already stretched.

Conversations about this essential part of life and parenting should always be about the benefit of the child in the long run.

Case study 1

Co Parenting by circumstances post separation

Olivia has three kids to two separate fathers from past relationships and has been receiving child support for each of them ever since the relationships broke down. One of the kids has now been diagnosed with additional needs and requires more attention and care, so family budgets and free time can get out of balance quickly.

• If something happened to one of the fathers and the child maintenance stopped, she would have to make some very difficult care decisions and she's understandably concerned her ability to care for her boys would suffer.

The answer - a life insurance policy on each of the children's Co Parent fathers.

Three things Co Parents need to understand about Life Insurance

1.  Understand the difference between the Policy Owner and the Life Insured

In Australia, a life insurance policy can be owned and paid for by a person different from the Life Insured. For example, a policy can be owned by a parent and the life insured be their child or parent or even an employee who is considered a Key Person to a business.

2.  Understand the Policy Owner gets to name the Policy Beneficiary

In Australia, if you are the  Policy Owner and paying the premiums for a Life Insurance policy, you have the right to nominate who is the policy beneficiary and make changes to the policy. The  Policy Beneficiary is the person nominated and named in an insurance policy to receive a future life insurance payout.

3.  Understand the special limitations of Life insurance nominations policies in a Super fund

When a life insurance policy is held in a super fund, it's fair to say the rules about who is allowed to be a nominated beneficiary, have not kept up with modern life. There are special rules about biologically related children under 18 that change once the child is over 18. The rules relating to stepchildren are even more confusing and may see a stepchild losing their right to inheritance once their stepparent dies.

Work with a professional adviser at Unusual Risks Insured who understands Co Parenting.

Case study 2

Practical planning for Co Parents

David separated amicably from his former partner last year who now has primary custody of his teenage daughter Sarah completing her private schooling. David's new partner has two infant twins who adore him and his time and finances for his new younger family are getting stretched looking after them all.

• The prospect of having to assume full financial care for his own daughter too, in the event that his ex-partner was to unexpectedly pass away, is protected by him having a separate life insurance policy on his ex and a separate life insurance policy on himself.

Both life insurance policies each name his daughter Sarah as the sole beneficiary of the policy. Of course, everyone hopes they will never need to make a claim, but now it's in place, they all benefit from the peace of mind this type of backup plan brings to all their families.

• Read The Questions every blended family wants answered, but never ask

Co Parents need life Insurance

Take a proactive approach to your Co Parenting.

Although your Co Parent may already have their own life insurance policy in place naming a number of different beneficiaries, taking out a separate policy on them where you are the policy owner puts you in the driver's seat.

You know for sure the policy premiums are being paid, the beneficiaries cannot be changed without your approval and the peace of mind knowing the policy is accurate and up to date.

How to set up a Life Insurance Policy as a Co Parent

Purchasing a policy on your ex-spouse or partner requires their cooperation as they will need to answer the personal health and lifestyle questions during the application process.

This is when things can get complicated.

Co Parenting by choice

• If your Co Parent is onboard, the process of setting up a life insurance policy on you or both Co Parents is straightforward

Co Parenting by circumstance - post separation

• Navigating a divided family can be both emotionally and financially difficult.

If your relationship with your ex is less than ideal, or they’re simply not invested in the welfare of their child, it might be difficult to convince them to complete the health and lifestyle questions that every life insurance policy requires.

Who should pay the insurance premiums?

The subject of who should pay for the premiums on a life insurance policy can also be problematic. Remember, the policy owner/payer gets to nominate the policy beneficiary.

• If your ex doesn't feel they should be obligated to make the premium payments by themselves, they may suggest that you split the cost of the premiums down the middle.
• If you're worried that co-managing the policy might become too stressful, you might consider making premium payments on your own.

How Unusual Risks Insured can help

As an independent third party, Unusual Risks Insured can send people applying for life insurance cover a confidential link to an online form so they can complete their own personal health questions confidentially, at a time convenient to themselves. This means we try and remove any face-to-face contact for them and maximise their privacy.

We believe in Advice Equality

Unusual Risks Insured specialise in working with clients with hard to insure health or occupations, people with diverse backgrounds, family and relationship structures, and people with high privacy needs - Australia-wide.

You can have a comfortable conversation with us

We’re the experts at talking about what matters most.

Advice equality means our clients never have to prepare for a homophobic conversation, religious judgementalism, never have to be prepared to be ‘the constant educators’ and be forever ready to explain and defend the benefits of PrEP, that HIV is a chronic but now manageable condition or how Gay Dads and Lesbian Mums have different needs, that growing families takes time and ultimately some guys love guys and some girls love girls, that love knows no gender and that Love Makes a Family.

We get it, we love it, we defend it and we celebrate you.

Begin with the end in mind 

Co Parenting, whether by choice or circumstances post separation is a part of Modern Australian Family Life.

Ultimately a Life Insurance policy alone is not the goal - it's a means to an end.

• It's a way to make sure your child is protected if you unexpectedly find you’re no longer around to care for them.
• It's a way to make sure whoever cares for your child has sufficient resources to do so, if you're no longer around and they unexpectedly find themselves without you.

For a Co Parent, increased peace of mind and financial security may come in the form of a simple life insurance policy.