Life insurance plays an important role in the divorce process, but is often overlooked amid other concerns like custody, alimony, splitting up assets, and acclimating to a new life. Life insurance is particularly important if there are minor children, and to protect the financial interests of both spouses. Here are four things you should do about life insurance if you’re going through a divorce:
Change beneficiaries. The primary beneficiary on your life insurance policy is probably your spouse. Once the divorce is final, you will probably not want your ex to benefit financially from your death. Most policies allow you to change beneficiaries at any time, so check with your insurance agent to ensure you can make any changes you want to make.
Understand cash value. Whole life and universal life policies typically accumulate cash value over time by taking a portion of your monthly premium and applying it to a fund that grows with interest. While your policy is still in effect, you can decide to forego the death benefit and take the cash value instead. When you are making an inventory of your marital assets, your policy’s cash value should be included as marital property. When marital assets are divided, you will get a portion of the policy’s cash value.
Protect support payments. If you are awarded primary custody and alimony, you will undoubtedly want to protect that income source with a life insurance policy on your ex. The benefit amount should be enough to equal the support payments until the last child reaches the age of 18. If your ex can’t be trusted to keep up the premiums, you may want to consider paying them yourself so you can ensure you have this important protection.
Protect your children. Unfortunately, not every custodial parent can rely on his or her ex-spouse to be a good parent or provider. Sometimes, a divorce may turn you into a single parent, solely responsible for your children’s well being. In that case, it is imperative that you have a life insurance policy to take care of your children’s financial future if something should happen to you.
We know that family law issues are often difficult, life-changing events. We also know how much it helps to have knowledgeable legal advocates on your side to help you obtain the best possible outcome. Contact us today for your free consultation.