What is
Divorce Insurance?
Life Insurance On the Payer.
An increasing number of separation agreements and divorce
decrees are requiring one spouse to maintain divorce life insurance for the benefit of
the other spouse or the parties' children. Such provisions are necessary because
in a majority of states spousal and child support terminate upon the death of
the obligor spouse.
If alimony or child support are expected to continue for many years, and if
they are going to constitute a significant part of the recipient's income, then
the recipient might want divorce life insurance in the event the payer dies.
In many states, the judge may order the payer to maintain
a divorce life insurance policy that pays off to the ex-spouse in the event the
payer dies.
Here are some pre- and post-divorce considerations:
Do not assume that your insurance agent or company knows
about your changed circumstances. If your spouse was your beneficiary and the
designation is not changed, your former spouse may receive the proceeds upon
your death. If a beneficiary designation simply reads "wife of the insured" or
"husband of the insured" and there is no spouse, the secondary beneficiary will
receive the proceeds. In some states a divorce automatically changes your
beneficiary designations (and your appointments of trustees, UTMA custodians,
etc.), whether you want them changed or not. Even if you do want the
designations changed, the automatic changes may not be the ones you would
select.
If you live in a Community Property Law or Marital Property Law state, it is
extremely important that the ownership of your life insurance be specifically
covered by the terms of your divorce decree or property settlement agreement. In
those states the law may actually grant an ex-spouse more rights in a policy
than they had during the marriage if the decree or settlement agreement does not
specifically dispose of the policies.
If you are contemplating divorce, you may have many options to consider with
respect to your life insurance coverage
Click here to get request a free Divorce Life Insurance Quote.
Disclaimer: We are not giving legal advise. No warranties. We disclaim all legal
liability
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