A matter of life and death

Unmarried needn’t mean unprotected

We write a lot about the financial consequences of divorce, which is to be expected as we are divorce lawyers. But we are also family lawyers, and families come in many different shapes and sizes. Sometimes our role is to help keep families together, or to help people navigate issues they may not even be aware of. Many couples choose not to marry, but are nonetheless committed partners with shared lives and shared resources. However, unmarried couples lack the legal protections afforded to married couples or those in a civil partnership. There are steps they can take, such as entering into a universal partnership or drafting a cohabitation agreement, that will protect their legal rights should the relationship end, either by mutual agreement or death.

But one provision often overlooked by unmarried couples, particularly if they don’t have children, is life insurance – more specifically the beneficiary arrangements. A survey conducted in the UK suggests that many unmarried couples with life insurance could be at risk of not receiving a pay-out on the death of their partner. According to life insurer Scottish Widows, just over half of unmarried couples know if their partner has a life insurance policy. Of these, 43% said there were no plans in place to ensure they are legally entitled to a pay-out. Further, 27% of people who are aware of their partner’s life insurance do not know its value; and 34% of couples rarely discuss their long-term financial plans. The published survey results do not reveal the age breakdown of respondents. Arguably younger couples and those without children may be less likely to discuss their financial futures.

A difficult conversation

Life insurance is often considered a difficult conversation to have. Many people – women in particular – are afraid it will make them appear mercenary or greedy…only in the relationship for the money. Death is also an uncomfortable subject, even though we will all die, eventually. The life insurance industry jokes that humans only have two problems: living too long and dying too soon. Retirement planning caters for the former; life insurance for the latter.

Why life insurance?

Why do you need life insurance at all? If you live to a ripe old age, with all debts and home loans paid off, there may be little your surviving partner needs to pay for in the event of your death other than funeral expenses, and these can be covered via a funeral plan. Unfortunately, accidents and illness happen, and life can be cut short unexpectedly. If anyone depends on you, life insurance can be a real help if you pass away. Children, obviously, need to be provided for. But even in the absence of children, life insurance can be critical. Many bond lenders insist on credit life insurance to cover the bond. This means the home loan will be paid off in the event of the death of the bondholder and the surviving partner won’t be left with a bond payment they can’t afford on their own, possibly having to sell the property and downsize. If your incomes are unequal, will you or your partner still be able to afford your lifestyle if one of those incomes disappears?

Having the conversation about life insurance is actually a way of expressing love and care for your partner. It also means discussing long-term financial plans and by association the nature of your relationship. Whatever the outcome, it is a healthy conversation to have.

Unmarried couples and life insurance

Currently, unmarried couples do not enjoy the same protection afforded to partners who are married or in a civil partnership. Therefore, it is important to have the conversation, because there is no default protection offered by the law. It is a good idea to consult a financial adviser to understand the implications of your relationship and your financial planning arrangements for the future.

Cohabitating couples have the option of nominating each other as beneficiaries in their respective life policies. This means that, if one of you dies having nominated your partner as beneficiary on your life insurance policy, the policy will be paid directly to your partner on your death.

Universal partnership

Although unmarried couples do not have the same legal rights as partners in a marriage or civil union, our courts have on occasion decided that an express or implied partnership – called a universal partnership – exists between a couple. It is very difficult to prove a universal partnership and the following requirements must be satisfied:

• Both parties are contributing to the partnership
• The partnership is making a profit
• The partnership operates for the benefit of both parties
• The contract between both parties must be legitimate

If this can be proven, then you can claim from each other. You are also legally protected on the death of your partner and can claim your partner’s life insurance if your partner has left a will specifically stating what you can claim from their estate.

Cohabitation agreement

Alternatively, you can draw up a cohabitation agreement that will regulate your finances during the relationship and cover other aspects of your relationship, such as division of goods. The agreement can include the payment of maintenance or life insurance in the case of termination of the relationship or death.

Legal precedent

Bwanya v Master of the High Court Cape Town and Others is an important case which may herald legislation that will give protection to the surviving partner in a cohabitation relationship. The Constitutional Court found that section 2 of the Maintenance of Surviving Spouses Act was unconstitutional and unfairly discriminated against unmarried couples by limiting it to married spouses.

The Court found that millions of South Africans are in life partnerships and form families in these partnerships and emphasised that all categories of families in South Africa deserve legal protection.

Times are changing and it is important that the law changes with them. Hopefully, the Bwanya case will contribute to these changes and old legislation will be amended and new legislation introduced to protect unmarried couples.

Cape Town family lawyer can help

Don’t take chances with your future. Simon Dippenaar and Associates Inc. is a firm of family attorneys in Cape Town and Johannesburg. If you and your partner are in a life partnership, we can help you draw up a cohabitation agreement and a will. Call us on 086 099 5146 or email sdippenaar@sdlaw.co.za.

Further reading:

• Not married – when the inevitable happens
• Cohabitation – what is it?
• Universal Partnership Agreement – Not getting married? You will need one

SD Law

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