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Life Insurance and Civil Union Spouses in Illinois

By Nottage and Ward on July 20, 2011

Now that Illinois’ civil union law is in effect, we will continue discussing the new benefits that have been granted to civil union couples in our ongoing blog series. In this post, we discuss life insurance in relation to civil union spouses.

Can life insurance be purchased to cover a civil union spouse?

Yes, life insurance can be bought to cover a civil union spouse. In order to buy insurance on someone else’s life and be designated as the beneficiary, it must be determined that someone has an “insurable interest” in the insured person’s life, meaning they would suffer losses, financial and otherwise, if the insured person died. Typically, insurance companies assume that close relatives, such as a spouse or child, have an insurable interest in an insured person’s life. Illinois’ civil union law guarantees that civil union spouses are treated equally as married spouses in regards to life insurance coverage and benefits.

Is a civil union spouse entitled to proceeds from a life insurance policy without a named beneficiary?

Yes, if a policy does not have a named beneficiary, the proceeds from the policy accrue to the estate of the insured person. As a result of Illinois’ civil union law, civil union spouses are entitled to the same inheritance and estate rights under state law as married spouses.

Qualified annuity contracts provide certain tax advantages to surviving spouses should an insured person die. Are these tax advantages available to civil union spouses?

No, since these tax-related advantages result from federal tax laws. Illinois’ civil union law does not, and cannot, change federal law. Civil unions and civil union spouses are excluded from the meaning of “marriage” and/or “spouse” in all federal laws, under the federal Defense of Marriage Act. As a result, a civil union spouse does not qualify for the tax advantages a married spouse is given under federal law, which includes tax benefits given to the surviving spouse of an owner of an annuity. Likewise, spousal continuation rights, such as allowing a surviving spouse to become the contract owner of a non-qualified annuity contract if the insured dies, are not granted to civil union spouses as these rights are also governed by federal law.

Visit http://www.insurance.illinois.gov to learn more or consult with an Illinois civil union lawyer, such as those at Nottage and Ward, to find out more about the rights granted to civil union partners in Illinois.

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