When you are going through a divorce, it is important to look at many aspects of your case, as changes may need to be made. For instance: your finances may change, your custody matters will be decided, and you will have to ensure that you put things in your name. But what happens to extremely vital maters like life insurance? Upon divorce, it pays to take a second look at your life insurance policy to make changes based on a variety of factors.
Divorce and Your Life Insurance Beneficiaries
As you know, life insurance isn’t only a good matter to have in place, it is also a contract. The life insurance company pays money to the designated beneficiary after your death, but what happens if your husband or wife is the beneficiary and you are now getting divorced? The policy owner, or the person the life insurance is being taken out on, is the only one who can designate or change the beneficiary.
If there are no children through the marriage, then this means that your wife or husband is the beneficiary, which means that you should immediately change this. If you do not change this right away, the proceeds of the policy will go to the ex-spouse if you pass away unexpectedly. If there are children through the marriage, then parents should maintain a life insurance policy for the children until they reach the age of majority. If one parent thinks that the other parent will not use the proceeds correctly or to the benefit of the children, then a trust could be set up as a second option.
You must also remember that there may be financial obligations as part of the divorce. If this is true, then the beneficiaries should be designated in an agreement. Perhaps the life insurance would work as a way to pay the wife’s alimony after the husband’s death – it should include provisions that state that alimony can be ceased if she remarries, and so forth.
Life insurance, as well as many other aspects of your personal life, are very important to you. This is why you want things to be taken care of in the event of divorce, when everything changes. Call us today for help walking through the divorce process. We are here for you every step of the way.