Life Insurance After Divorce
Life Insurance After Divorce – Life Insurance Matters
Many couples, typically spouses, consider life insurance for married couples in order to lower the cost of life insurance or to make sure their estate is protected. When it comes to joint policy, it is not as common as individual life insurance, but it is usually cheaper than two separate plans. With joint life insurance for married couples you will deal with just one set of paperwork. However, if marriage comes to en end, sorting out life insurance after divorce can be really confusing. Life insurance is usually connected to your spouse, which is why it’s important to understand how divorce can affect your finances.
What happens with life insurance after divorce?
If you have life insurance and you happen to list your spouse as beneficiary, before you actually finalize your divorce make sure your policy is fixed the way you want it. In case of divorce you may wish to change the person to whom a payout would be made if you died. The same goes for a will, you may want to make changes depending on your current situation.
However, when it comes to life insurance after divorce with children in the picture, all the questions are about insuring future alimony and child support payments. One of the biggest questions for is whether you will receive alimony and/or child support after your divorce. The answer is no.
If your ex-spouse dies, this money will stop. That is why many financial advisers suggest that you use an existing policy (if purchased during your marriage) or to buy a brand-new policy and set up a life insurance policy on your ex-spouse. If the policy is large enough, it could replace the money for alimony and child support payments.
If that is the case, it is better to pay the premiums yourself, in order to keep the payments current and avoid depending on your former spouse. However, don’t forget to protect your ownership rights. In other words, make sure you’re the owner of the policy or the beneficiary could be switched after the divorce, leaving all your incomes unprotected. Maybe you can even use an existing policy which your former spouse owns.
Policy could be signed over to you during the divorce proceedings, as part of the divorce agreement. The best thing would be to consult your attorney or financial adviser, to make sure all the additional paperwork is there. This is the easiest way to protect yourself and your children.
When it comes to life insurance after divorce, keep in mind that some types of life insurance build cash value (whole life insurance or variable life insurance). Cash value is an asset, so don’t forget to include any life insurance cash value when you are listing your assets. This way you can be sure you will get your fair share of the money when you are dividing property during the divorce proceedings.
Talking about life insurance after divorce, the most important thing is to explore all the options you have before you actually get divorced. It is very important to have the right protection, therefore consult your financial adviser or lawyer and make sure you didn’t forget anything. It is very important to make plans for your financial future, especially when you are going through divorce.