I’ve been in the life insurance business long enough to see a time when life insurance companies would outright deny life insurance policies for homosexual couples, citing “no legal financial justification”. They would then turn around and approve insurance on an unmarried couple by saying, with a wink of the eye, “just put down that they are engaged”.
This eventually evolved to a time when companies would allow a policy as long as the gay couple could prove they had a joint mortgage. They would then only insure each for up to half of the mortgage. The unmarried, “engaged” couple didn’t have to prove anything. They, just like a married couple, could get a multiple of their annual income recognizing that the primary reason for life insurance is income replacement.
To put this in perspective let’s say we have two couples living “outside of marriage”, one straight and one gay. To make it all simple we’ll say they are all 30 years old, in good health, and all of them make $100,000 and both couples have a $300,000 mortgage. At 30 years old most companies will allow an income replacement multiple of 20 to 30 times annual income, most leaning toward 30. So, in the evolved situation above, the unmarried straight couple could be approved for up to $3 million each. Their counterparts living next door, as long as they had a joint mortgage and could prove it, could get approved for $150,000 each. What’s wrong with that picture? Well, let’s just start with everything.
Fortunately there has been further evolution urged along by law suits and in general more acceptance of gay and lesbian couples as legitimate relationships. We are now at the point where we stand with so many other people with “impairments” trying to get life insurance. No, I’m not saying your lifestyle is an impairment. What I am saying is that just like an impairment such as bipolar disorder, there are many more companies that won’t touch it than will. By no stretch of the imagination are all companies on board with equal treatment, but there are now enough that couples have the opportunity and choices about companies and products.
So, let’s cut to the core of the matter. Yes, I am saying that couples in homosexual relationships can get adequate life insurance today underwritten just like everyone else, based on health. It’s a little hard for a company to discriminate on one hand and support on the other. The world is becoming more fair.
I know I say this all the time, but this is another one of those issues where choosing a life insurance agent who doesn’t know what companies are amenable and which aren’t is critical. Wrong agent, wrong company, wrong outcome.
One other issue that has to be addressed at the same time as applying for life insurance is getting a legal medical power of attorney. I’ve shared in the past how the absence of this turned into a year long nightmare for a woman who was the beneficiary of her fiance’s life insurance. He died during the contestability period and she had no legal standing, even as beneficiary, to sign an authorization to release medical records. The family of her deceased fiance fought with her saying they should get part of the money (clearly not his intent). They even tried to bargain with her to sign the authorization for part of the death benefit. Ultimately the family lost in court, but that power of attorney would have made it a quick easy process.
Bottom line. While not all hurdles have been cleared in financial planning for gay and lesbian couples, at least life insurance can be checked off the list.