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Divorce ~ Life Insurance After Divorce
What happens to Life Insurance After Divorce? is an often overlooked element of divorce, yet one of the most important. According to statistics today in 2018, about 40 to 50% of marriages in the U.S. end in divorce. A pretty high rate of divorce, if you ask me. Although, we never imagine when we get married that we would be divorcing the love of our life. Sadly, it happens and usually, the last piece of the puzzle in divorce is ~ life insurance.
Life Insurance usually gets forgotten about!!!
As a matter of fact, there are a few factors to consider when it comes to divorce settlements.
- Child Support
- Life Insurance
Take the emotion out of it!!!
When children are in the mix, the end result will always be the same. What is in the best interest of the children? From experience, it is best to make the divorce process like a business transaction. With this in mind, take all the emotion out of it. In order to have an amicable, peaceful settlement, this is a must! (Trust me when I say, I know how you would rather see your Ex stuck in a ditch. LOL)
Of course, when young children are involved, I know how challenging this could be. Therefore, write everything down you want and what you are able to live with within your divorce and for years to come. Think of this is as an investment. Be clear what is truly important to you. Honestly, there has to be a give and take with your soon to be Ex-spouse. To emphasize, be very open to compromise and remember who is watching you through this divorce ~ Your Kids!
JOINT LIFE INSURANCE POLICY AFTER DIVORCE ~ CAN IT WORK?
Many clients ask, Can you Keep Life Insurance After Divorce?
In the case that you have a joint life insurance policy, this policy cannot be divided. In regards to divorce and life insurance, one of you can decide to take over the policy as a single policy or just cancel it altogether.
Money back in your pocket!
If you are unsure what to do, compare the cost of taking over the policy you already have in place and a new single policy. Your independent agent will be able to help you with the decision making. It is always best to ask for guidance because their goal is not only to provide you with the best choice for your children if there is a payout.. but if your independent agent is doing their job correctly, they will be saving you MONEY! Putting that money back in your pocket where it belongs!
DON’T FORGET TO CHANGE YOUR BENEFICIARY AFTER YOUR DIVORCE
This is important! A divorce is messy as it is. Could you imagine forgetting to change the beneficiary after a divorce? Let’s say, for instance, you remarry, then you die some years later. If your beneficiary on your policy was never changed, Your Ex will inherit the payout, not your current Spouse. If there are no children involved especially, you want to make sure all of your paperwork is up- to -date!
IS A LIFE INSURANCE POLICY A MARITAL ASSET
When it comes to your term life policy they will consider this to be separate property. This does not matter when the policy was obtained. Now with a whole life policy, this will be considered marital property. The courts will tell you the cash payout/surrender value will be subject to division between the two parties.
CAN YOU TAKE OUT A LIFE INSURANCE POLICY ON SOMEONE WITHOUT THEIR KNOWLEDGE
Simple answer, NO. In order to take a policy out on someone you will need the following:
- prove insurable interest
- medical exam on person to be insured
LIFE INSURANCE ON EX-SPOUSE
LIFE INSURANCE TO COVER ALIMONY/CHILD SUPPORT?
Will you receive alimony and/or child support after your divorce? You will want to protect that income. After a divorce, and your Ex dies, this money dies with him.
With that said, many clients purchase a life insurance policy on their ex. You have two choices, buy a brand-new policy or keep your current policy as long as the life insurance policy was purchased during your marriage. Remember, you want a policy to be enough that it could replace the money you receive in those alimony/child support payments.*
Life insurance spouse BENEFICIARY rules ~ LEGALITIES
Let’s face it, at this point… You think your Ex is an Idiot… My Lisamarie tip#1 to you is….
I suggest paying these premiums yourself. To explain, this ensures that the premiums are paid. And that your Ex does not allow the policy to lapse due to neglect! Let’s face it, you divorced for a reason!
Depending on an Ex is like brushing your teeth while eating Oreo cookies. It just doesn’t make sense. It will be more of a headache dealing with non-payment of premiums and a lapse of policy that the insurance company would end up terminating. You already had years of headaches with your Ex-Spouse. Don’t add any more aggravation!
Lisamarie Tip #2: Always consult your attorney regarding legalities.
Last minute life insurance tips... Make sure you are the owner of the policy! This gives you total control of the policy. In fact, you will be able to change the mode of payment, control over the face value and be in control of changing the beneficiary/beneficiaries. With that being said, for this to be a smooth, easy process that your Ex will not give you a difficult time about, it is ideal for you to be:
- The Payor of policy
*Please note, if you decide to keep an existing policy, I urge you to consult with your attorney. There will be waivers/forms to sign in this agreement to change ownership. Protect yourself!!!
COURT ORDERED DIVORCED DECREE AND LIFE INSURANCE
So almost 100% of the time the “breadwinner” of the dissolving marriage ordered by the court to purchase the life insurance policy. The reason for this is to bridge the gap in the event of the breadwinners death. Your children and you do not miss a beat, and will not lose out on the following.
- Child support
- Their home
*This is usually until the children are 18 years of age.
LIFE INSURANCE AND DIVORCE SETTLEMENTS ~ LIFE INSURANCE AND DIVORCE IN NEW YORK
In divorce situations, both parties should want a life insurance policy in place. In the first place, it protects you, your Ex and most of all your children you have together. Important to realize, this is to insure that in the event of a parents death, the children/beneficiaries are provided for.
Check the state you live in. There could be different laws in each state…
For instance, in New York State, a court can demand that an existing life insurance policy is kept intact with your soon to be Ex. With you and your minor children remaining as beneficiaries. However, the court can not force you to obtain one unless it is part of a stipulation that you and your Ex-agree to. *In some cases it can and will be court ordered. That depends on you, the more amicable you and your Ex are, the less the court has to intervene.
UNDERSTANDING BENEFICIARIES ~ LIFE INSURANCE DIVORCE BENEFICIARY
Irrevocable Beneficiary Vs. Revocable Beneficiary * know the difference!
So what about life insurance beneficiary after divorce? If you are in process of separating and divorce, your soon to be Ex spouse who is the the owner of the policy does have the rights to change the beneficiary.
In the event that he/she makes changes, speak to your attorney regarding your rights.
- Irrevocable Beneficiary ~ requires the owner to get the consent of the beneficiary to sign off on any policy changes.
- Revocable Beneficiary ~ changes can be made by the owner of the policy without the consent of the beneficiary.
What about Alimony Life Insurance
Your ex spouse is not permitted to deduct life insurance premiums from an alimony payment. Unless otherwise ordered by a Judge in a court. However, if the ex spouse is making the payments for life policy those premiums may be deducted. It is imperative you inquire with your attorney for clarification.
WHAT TYPE OF LIFE INSURANCE POLICY SHOULD I PURCHASE AFTER DIVORCE
Frequently, many clients ask which type of life insurance should I purchase after divorce. Below, I will give you the break down of Term Life Insurance Vs. Whole Life Insurance.
Term Life Insurance ~ Term life insurance is truly the most popular choice for young families/adults to provide coverage for their family. You choose the term, either 5, 10, 20 or 30 years, and you also choose the coverage amount. Once the term ends. Coverage ends. Simple as that. Of course, you can renew.
In fact, term life is the cheapest affordable life insurance. Honestly, when deciding on coverage amount, half million or a million dollar policy is something to consider when you have small children. You want enough coverage to get them out of school and out of the house.
- High School
Whole Life Insurance ~ First, Whole life insurance is a bit pricier. Secondly, it provides you coverage for your entire life. Thirdly, it holds a cash value. (Not as popular as Term.) Lastly, whole life is geared more towards elderly clients and for Final Expense and Living benefits life insurance.
NO MEDICAL EXAM OPTION ~ LIFE INSURANCE AFTER DIVORCE
To make things super easy and not have to deal with your Ex Spouse’s nonsense, You could opt for a no medical exam policy. All that is required is the application and a lifestyle questionnaire. A few top rated A+ carriers we like are:
- Mutual of Omaha
- American National
WHEN YOU NEED A LIFE INSURANCE DIVORCE ATTORNEY
Certainly, life insurance after divorce can be tricky. Contact a reputable life insurance attorney before a dispute arises with the beneficiaries. They will help you with the following:
- Multiple beneficiaries disputing in event of policy owner’s death
- Beneficiary not listed on the policy
- Change of beneficiary without permission and illegally
- Surviving spouse and the ex-spouse disputes
- Children dispute over beneficiary and payout
LET’S RECAP: WHAT HAPPENS TO LIFE INSURANCE IN DIVORCE
Don't wait until the last minute!
In the first place, divorce gets messy. To put it differently, dealing with an Ex is plain exhausting. Clients forget about Life insurance during a divorce.
Given these points, it creates a lot of anxiety as at the last minute of a divorce settlement. Clients often call us in a panic because they must have a policy in place before their next court date or settlement.
Consequently, in some cases, the court may mandate you have a policy in place by a certain date.
In conclusion, we urge you to make sure this is a top priority. At the beginning of your divorce, not at the end.
how to split a life insurance policy in a divorce
It is a great idea to have financial planners to help you during the divorce process. Besides health insurance being important for you and your family, you will have to discuss bank accounts, products and services regarding permanent life insurance coverage. In addition to premium payment and the death benefit.
Make a list of everything. Nothing should be left out! Negotiate anything and everything so that way later on, you will not be in a big mess of confusion!
LISAMARIE’S THOUGHTS ~ LIFE INSURANCE AND DIVORCE
As a mom of 4 children, For this reason, (as a mom standpoint) I highly recommend having life insurance for both parties in place. As you already know at this point, it is not about you and your Ex anymore. In other words, it is about your children. Important to realize, life insurance ensures what you had envisioned for their future be kept intact. Truly, it protects you financially.
Occasionally, an Ex husband / Ex wife already have a life insurance policy in place through their employment. From experience, I recommend you inquire with your attorney. With this in mind, insist your Ex purchase an additional policy as part of your divorce settlement. Reasons are:
- Loss of employment
- Becomes disabled
- Quits employment
LET PINNACLEQUOTE HELP YOU ~ LIFE INSURANCE AFTER DIVORCE AND MORE
Helping one client at a time in the Art of Life Insurance! Best PRICE, Best CARRIER ~ GUARANTEED!!!
If you have any questions regarding Life Insurance after Divorce or any life insurance concern, Call PinnacleQuote Life Insurance Specialists at (855) 380- 3300.
For more information on Divorce, alimony insurance: CLICK HERE
My name is Lisamarie. I am Danny’s partner. I schedule all Danny’s phone appointments. I am available 9-9pm (est.) Monday -Friday. In addition, I am on call Saturday/Sunday’s for our West Coast Clients.
If you have any questions for me or would like to schedule your life insurance phone appointment, call me directly, (855) 380-3300. Email me at: Lisamarie@PinnacleQuote.com. I am looking forward to speaking with you! ~ Lisamarie