We understand that the process of going through a divorce is a difficult time for everyone, especially if children are involved. Because divorce settlement negotiations can be difficult, it’s important that you are prepared to handle the possible life insurance questions that may arise during this process.
Who owns the life insurance policy?
One of the most important factors regarding your life insurance policy is who will actually own the policy. Whoever owns the policy controls who the named beneficiary is. If minor children are involved in the divorce, a good rule of thumb is to name the custodial parent of the children as the owner of the policy.
If you choose this option, you may want to have your attorney include a provision in the divorce settlement that states that if the policy is allowed to lapse, or if the beneficiary is changed, that you and your children are entitled to part of your ex-spouse’s estate that is equal to the amount of the life insurance policy.
How quickly do you want to transfer ownership of the policy?
If you are responsible for child support or alimony, you may want to transfer ownership of your life insurance policy to your spouse or custodian of your minor children right away to guarantee those payments are made in the event of your death.
In many cases the Court may order alimony or child support for a specific amount of time. In this case, you may choose to purchase a term life insurance policy that stays in effect for only the amount of time specified by the Court.
What about a separate life insurance policy?
If you have children from a previous marriage a term life insurance policy may be a good way to guarantee these children can benefit from your estate should you die. Otherwise, those children could sue your estate if they are not fairly dealt with.
For example, if you purchase a permanent life insurance policy and name the grown children of a previous marriage as the beneficiaries, those children will get the death benefits when you die.
We can help you with your life insurance needs during divorce. It is vital that you plan carefully when experiencing a divorce to make sure you are meeting your legal and financial duties.
Laws That Pertain to Life Insurance During Divorce
A particularly painful situation can be the reality of dealing with life insurance vis-à-vis divorce. Knowing your rights and knowing your entitlements are essential to getting successfully and happily through any legal situation and entanglement, and this is no different. The laws pertaining to life insurance during divorce can be confusing and difficult, but are necessary for ensuring that policies get handled the right way and that these long personal and financial investments are salvaged.
During divorce, a husband can be forced to leave a certain amount of his life insurance to a child as a beneficiary. On the other hand, if you have not decided on provisions during divorce, you cannot go back to modify your life insurance policies resulting from your divorce years later, unless you show reason why things have changed to make this necessary.
Other life insurance laws during divorce
If laws involving life insurance are broken by a husband or a wife during divorce, the estranged party has the right to demand a court order of the other party to amend the situation involving life insurance.
After a divorce, to get a life insurance death benefit, you must still be named a beneficiary or be renamed a beneficiary. If you are not named, you will not receive a benefit, even if you were named prior to the divorce. If there is a clause in the divorce or the policy stating that mutual children must receive the benefit, even if there are children with different marriages, the mutual children will still be listed as partial beneficiaries.
These are just a few of the laws pertaining to life insurance and divorce. If you’d like to learn more about obtaining life insurance if you’re going through a difficult divorce — either to provide for your children, or as part of a court order.
- life-insurance-divorce.com -