Divorce and Life Insurance Matters

Divorce and Life Insurance Matters

During divorce, one aspect that is most likely not considered as much as it should be is life insurance matters. Before filing for divorce, it is helpful to gather all available information regarding the type of life insurance you and your children have. A spiteful spouse may try to cancel or change the beneficiary of your life insurance before or after the final divorce settlement is reached. To prevent this from happening, these issues should be addressed by your attorney and financial planner.

If the client requires continuing support or spousal support as part of their divorce settlement, it is suggested for them to work with their attorney to prevent maintenance from being terminated in the event of the payor's death. The divorce decree must thoroughly outline the amount of support that will be granted in the event that the payor dies before the term has expired. Experts suggest putting the proper terms in the decree to ensure spousal support payable postmortem or payable in an amount to guarantee the payor's obligations if they would have lived to the end of the stated term.

It is also advised that the payor creates an authorization letter permitting the payee or their agents to communicate directly with the life insurance company in regards to any aspect of the policy. If this is not completed, the life insurance company will normally refuse to communicate with anyone other than the owner of the policy. Individuals in this situation should classify who is going to follow through on the life insurance arrangements, and confirm everything in writing. They should at least get proof of insurance before the decree is signed. If the individual is buying a new policy, they need to ensure that it is in effect before the decree is signed and the divorce is finalized. Insurance companies require that there is an insurable interest, which means that you cannot buy life insurance for an ex-spouse.

The individual should also get confirmation from their insurance company that shows they will honor the terms in the decree. If the insurance company will not honor the agreement, you may want to pursue legal action before the divorce settlement is made. Another option is to designate the beneficiary as the owner of the insurance policy—at least until the end of the spousal maintenance term. This will have to be negotiated as part of the final divorce settlement agreement, and will give the beneficiary designation and paying premiums to keep the policy in place.

At Zendeh Del Law Firm, PLLC, we recognize how complicated it can be to navigate through the divorce process. There are numerous things to consider, and when not all factors are addressed, an issue could arise in the future. If you would like to find out more about divorce and your life insurance matters, do not hesitate to contact our Plano family lawyers today.