Life Insurance After Divorce
Divorce is a life-changing experience that creates a number of complications and obstacles, but when it comes to life insurance after divorce, it is very important for you to consider what your needs are and how to keep your coverage. After you file for divorce, you will need to work with your insurance agent to update your policy to reflect these changes. However, there are a few key things you need to know about the process and what to expect from it.
How to Update Your Life Insurance After Divorce
As soon as you decide to file for divorce, it becomes important for you to update your coverage. If you have a life insurance policy on yourself, it is important to update your coverage to list the beneficiary you desire. For example, let’s say you are buying coverage for yourself and have your soon to be ex named as the beneficiary. Contact your life insurance agent. Have the beneficiary changed to your children or another person you wish to receive the funds. Keep in mind that if you have a joint policy, you may have to make changes to the structure of the policy to allow for this. Your agent can offer more insight into how to do that.
Life Insurance on Ex-Spouse Divorce – What Are Your Rights?
What if your soon to be ex is the one that has the life insurance policy and you were named as the beneficiary? Generally speaking, you can only maintain coverage on a person if you have a vested interest in their life. As an ex-spouse, you may no longer be able to obtain and maintain coverage in this manner. However, if you have been paying into the policy long term, there may be a cash value listed. This is common if you have a whole life insurance policy. It becomes important for you to work through the divorce process to make decisions about how that cash value will be used. In most situations, you will need to consider cashing out the policy if other options are not possible.
Life Insurance and Divorce Settlements – Who Makes the Decisions?
When you and your spouse cannot come to a decision about life insurance, divorce settlements become necessary. A judge can work with you to settle all aspects of your assets splitting. Just like your home or other possessions, each item needs to be considered in terms of who should own it after the divorce occurs. With life insurance, any cash value needs to be considered in this way. The court will rule if the funds are accessible as part of the estate and, if so, determine how it will be divided. In all cases, the insurance policy needs to follow all rules set by the court in the settlement of the case.
Life Insurance and Divorce Doesn’t Mean the Risks Are Less
When it comes to life insurance and divorce, it is also important to remember that the reasons you selected a policy still exist. For example, you may have decided to purchase life insurance to help pay for your kids to ensure they had financial stability should something happen to you. This need may still be present. That is why it becomes important for you to work with your insurance provider to make sure your needs and risks are still being met.
Getting Life Insurance After Divorce
If you have filed for divorce, you can still obtain life insurance. Most people should have it. You do not have to list or even inform your ex about your purchase of a life insurance policy. It is a type of asset you can take out to cover your loved one’s needs should something happen to you. If you are the custodial parent, it is important to consider the value of having your own policy. It can minimize risks to your family throughout their lives. You can also choose who to list as your beneficiaries. This can be anyone you like including a trust that helps to manage the life insurance’s value if your children are young. The key here is setting it up to reflect what your needs are now.