Term Life Insurance Articles
What Divorce Might Mean For Your Life Insurance Policy
2010-01-04
One of life's greatest disappointments is when a marriage ends in divorce. Chances are you're deeply hurt that your marriage didn't last - after all, you made an important vow. Regardless of your pain, you must stay focused on business issues that arise from being single again. One of those issues involves your life insurance. While alimony and child support play a big role in finalizing the financial side of a divorce, you should learn how your insurance will be affected by your new marital status. This is just as important as other financial matters.
A good divorce settlement should include term life insurance. With term life insurance coverage, the ex-spouse who's responsible for alimony and child support would continue to provide financial support if he or she were to die. Without it, all financial agreements concerning the divorce would be cut off - unless the children are minors. In this case, the surviving parent would collect their ex spouse's social security. The ex-spouse receiving payments should protect themselves with a divorce stipulation that states that their ex-spouse keep the term life insurance premiums current. This is necessary because the former spouse could eventually cease payments on the policy, thus causing it to lapse.
Another situation that could happen concerns the former spouse changing the beneficiary to someone else besides their former spouse. Prevent this occurrence by stating in the stipulation that if the ex-spouse names another person as beneficiary to this policy, the agreement has been violated. Thus, in violation of the agreement, the ex-spouse who's providing the financial support will be found in contempt of court, along with fined or penalized. In the event the ex-spouse doesn't need alimony nor child support, then it's legally fine for the person who would have provided support to change their insurance's beneficiary. In most cases, the children of the divorced couple become the beneficiaries. Remember, however, that minor children are unable to receive insurance benefits until age 18. Therefore, the insurance company will maintain the benefits until they reach this age. In simple terms, your ex-spouse will likely not be involved in your insurance matters if they're remarried with a sufficient income to support them and your children.
Term life insurance rates are cheaper than permanent life insurance, and therefore, are better. Also, this type of insurance policy provides more insurance protection; whereas permanent life insurance basically just builds cash value. The key to this whole matter is to be smart and plan ahead on a divorce agreement that will provide for all your family members.
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One of life's greatest disappointments is when a marriage ends in divorce. Chances are you're deeply hurt that your marriage didn't last - after all, you made an important vow. Regardless of your pain, you must stay focused on business issues that arise from being single again. One of those issues involves your life insurance. While alimony and child support play a big role in finalizing the financial side of a divorce, you should learn how your insurance will be affected by your new marital status. This is just as important as other financial matters.
A good divorce settlement should include term life insurance. With term life insurance coverage, the ex-spouse who's responsible for alimony and child support would continue to provide financial support if he or she were to die. Without it, all financial agreements concerning the divorce would be cut off - unless the children are minors. In this case, the surviving parent would collect their ex spouse's social security. The ex-spouse receiving payments should protect themselves with a divorce stipulation that states that their ex-spouse keep the term life insurance premiums current. This is necessary because the former spouse could eventually cease payments on the policy, thus causing it to lapse.
Another situation that could happen concerns the former spouse changing the beneficiary to someone else besides their former spouse. Prevent this occurrence by stating in the stipulation that if the ex-spouse names another person as beneficiary to this policy, the agreement has been violated. Thus, in violation of the agreement, the ex-spouse who's providing the financial support will be found in contempt of court, along with fined or penalized. In the event the ex-spouse doesn't need alimony nor child support, then it's legally fine for the person who would have provided support to change their insurance's beneficiary. In most cases, the children of the divorced couple become the beneficiaries. Remember, however, that minor children are unable to receive insurance benefits until age 18. Therefore, the insurance company will maintain the benefits until they reach this age. In simple terms, your ex-spouse will likely not be involved in your insurance matters if they're remarried with a sufficient income to support them and your children.
Term life insurance rates are cheaper than permanent life insurance, and therefore, are better. Also, this type of insurance policy provides more insurance protection; whereas permanent life insurance basically just builds cash value. The key to this whole matter is to be smart and plan ahead on a divorce agreement that will provide for all your family members.
