No married couple intends to divorce, yet we all know it happens all the time. The decisions spouses made together about life insurance are just one of the many things that are affected by divorce. Whether you or your soon-to-be ex-spouse have a policy or not, life insurance is something that must be addressed in divorce proceedings.
When married couples purchase life insurance either separately or together, the spouse is usually listed as the beneficiary to the policy. Life insurance is usually purchased by couples with the goal of providing financial means for the other to meet financial obligations or goals. Death benefits may be intended for paying off a mortgage, or for sending kids to college. Some of these financial goals may stay the same after divorce, but many will no longer be jointly shared financial obligations.
Divorce also may prompt the spouse paying child support or alimony to need to obtain a life insurance quote. Even if you didn’t previously have life insurance, your divorce proceedings may require you to purchase a policy. You may need to obtain life insurance to guarantee the future payments you are obligated to pay your spouse for alimony or child support. In most cases, term life insurance is considered acceptable and appropriate for divorced spouses paying alimony and child support.
It isn’t always in the best interest of divorcees to change their life insurance beneficiary to someone other than their ex-spouse, even if you are the one receiving child support and alimony. If you die, your ex-spouse is likely to gain custody of your children, and will have the financial burden of raising them alone. On the other hand, if your ex-spouse is remarried or very financially secure, he or she may no longer be an appropriate beneficiary choice.