Husband Cancels Life Insurance, Wife Divorces Husband

Divorcing someone just because they cancel their life insurance policy? Is that a reasonable thing to do?

The idea stunned me when I first read the e-mail. I figured there had to be more to the story, and there probably was. But as I read Melinda’s e-mail, I realized that when her husband canceled that life insurance policy, it was the final straw.

For her husband Jim, it was just a financial decision. He had recently suffered a downturn in his business and cut the insurance as a measure to trim the red ink. But Melinda thought other expenses should have been cut in order to get out of debt.

And Jim’s unilateral move put Melinda in real financial danger. Besides that, it was a breach of trust. When they got married, they agreed that they would make all major financial decisions together. And that’s how they approached their financial life – until Jim put the kabosh on his life insurance policy.

Melinda was counting on that insurance. She realized that the proceeds of that policy were the only safety net she had in case her husband died.

Now that he’s cancelled it, if he does die, Melinda will wind up out in the cold… Literally.

What could Jim and Melinda have done differently to avoid this trouble?

The most obvious thing would have been for Jim to talk with Melinda before he cancelled the policy. He probably just did it because he felt trapped and didn’t discuss it because he was ashamed of not making as much money as he had in the past.

But it doesn’t stop there. I believe that Melinda bears some responsibility.

Could she have seen this coming? Did she suggest ways to save money? Did she look for cheaper life insurance? Was she involved in her husband’s business? Significant business downturns rarely happen over night. Did she ever ask how things were going? Did she pay attention? When she saw things going downhill, did she talk about the idea of 2nd job (for Jim or for herself)? Did she discuss the personal budget situation with him? Since the life insurance was so important, should she have been on top of making sure the premiums were paid?

I’m not trying to blame this on Melinda, and I’m not trying to create a new “Days of Our Lives” soap opera. I’m trying to determine if something can be learned from Jim and Melinda.

When you encounter financial challenges as a couple, it’s easy to point the finger. But it’s rarely helpful. In fact, if you’re really looking for a silver lining in an otherwise dark cloud, find how you contributed to a problem.

Even if your spouse is 99% at fault, consider your 1% – at least at first. By doing so, you accomplish a number of very important things.

First, by examining your own behavior, you have a real chance at doing better next time. I don’t know about you but I have no control over my spouse. I have a lot more control over my own actions.

Second, by admitting your own responsibility, your spouse will be more willing to admit their own failures.

Let’s say your husband comes home and announces he just signed up for a new credit card because they offered 5000 bonus miles. After you review the paperwork, you find that the credit card was a bad deal. Now you want to close the account because the annual fees are ridiculous.

At first, it’s hard to see how you had any part in your husband’s thoughtless behavior.

But upon closer inspection, you understand there are things you could have done differently. You could have gotten yourself involved in the search for a good credit card, for example.

When things go wrong, this exercise is super important. It gives you your best shot at improving your finances and your relationship. It’s also the best way to stay out of divorce court.

I know this is really a tall order – especially when your partner did something colossally dumb. I certainly don’t take advantage of this idea as often as I should.

How about you? When you have found yourself in a similar situation… Have you examined your own part? What was the result?

11 Responses to “Husband Cancels Life Insurance, Wife Divorces Husband”

  1. Anonymous

    If her husband is like mine, I don’t blame her. I didn’t divorce mine, but… My husband told me a couple of years ago he didn’t want more life insurance because he didn’t want me having fun once he was gone! This year, though, I got the ball rolling myself, and he ended up tripling his coverage. I’m aiming for more, but right now, I’ll take what I can get.

  2. Anonymous

    #9 Rosa) Obviously it wasn’t a “secret”, since Melinda knew he canceled the policy. The only way she’d know is if Jim told her himself (or told her before he did it after she made threats…who knows?).

    Jim canceled the policy on himself, but there is nothing stopping Melinda from taking out her OWN policy on Jim’s neck though.

    This entire story is just bizarre and makes no sense.

  3. Anonymous

    I’ve seen too many people’s lives significantly damaged by financial secrets. If he’d do that without telling her ahead of time, what else is he doing without asking?

  4. Anonymous

    Neal, great post again. It seems to me that both parties were to blame. He should have talked to her before making large financial decisions without her, but at the same time she has to make a conscious effort to be engaged in their financial lives together. Communication is always the key to a couple being together. It seems that in most couple disputes, almost always, both parties are at fault, to some extent. Sometimes, one person is very little at fault, but for him to cancel the insurance is one issue, but her rash decision to suddenly divorce is even more extreme. Countering a rash move with another one doesn’t make the situation better. She made the situation go from bad to worse. They should go into therapy together and determine their needs before making any other quick decisions.

  5. Anonymous

    Wow, I’ve got mixed feelings on this post. While My hubby hasn’t cancelled the life insurance, he continues to use credit cards. I had all the cards paid off after 2 years of marriage and then he went back to school full time. A year and a half after he graduated, we moved. He opened up three new credit cards and proceeded to charge, charge, charge. Things for the house, business travel, eating out, sports equipment for the kids. I saw it happening. I warned him more than once. He finally faced it 2 years (and $40,000) later when we were juggling finances to enroll our son in a private High school. He’d only been applying his business expenses to his credit card balances. He knows it was stupid, but he got caught up in being able to buy everything he’d always wanted. Now, 2 years later I have had control of the total finances again and am agressivly paying down debt. I did have him get a debit card for his credit union account and told He still insists he needs a credit card (ok, business travel). But he persists in putting tanks of gas on it because he’s not sure how much money is in his Credit union account. My husband is a grown man. When we talk, he tells me he is committed to the same financial goas I am, but he does not walk the talk consistently. I am very frustrated. I feel like he breached my trust. He doesn’t want to think abotu bad possibilitied because he’s “Such a worrywort” he’s afraid he’d be paralyzed with fear. So he does not put a priority on minimizing credit card debt (give up Cable completely? no way!). It’s an attidude. I can imagine that coudl be the case for the couple described. The wife thinks she could maybe take on half the persona debt, pay it off and begin to save while the husband will continue to incur debt, not think abotu the future and never change his ways. By staying in the marriage, the wife see no change possible outsdie the marriage she may have a shot at a stable financial future.

  6. Anonymous

    Melinda’s story doesn’t add up: “..Melinda was counting on that insurance. She realized that the proceeds of that policy were the only safety net she had in case her husband died…”

    So, she’d be financially devastated if her husband died — yet she makes a business decision that she’d make more by divorcing him?

    Hope Jim has a good divorce attorney. Good luck to them both.

  7. Anonymous

    From a purely financial standpoint, this seems like a stupid reason to get divorced. How is Melinda better off with no life insurance *and* all the financial fallout that comes with divorce?

    Clearly, the cancellation of the life insurance policy is not the first breach of trust in this relationship.

  8. Anonymous

    I think there is valid reason for the wife to divorce the husband because it deals with breach of trust. I carry life insurance on myself and my wife and I agreed years ago to sacrifice in order to make the payments and use money she got from her inheritance to pay it off. Both of our incomes were used as we commingle our finances. Now that we are retired on my retirement and she is no longer working the life insurance is a big part of our financial planning to take care of her if I die first. If she dies first I still have my retirement. There are many smaller things that couples divorce over that are laughable. Putting the kabosh on life insurance surely merits divore. Another reason would be a spouse being a shopper to the point of endangering future economic security that would be grounds for divorce. As far as marrying someone with too much debt that is just walking into trouble.

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