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Divorce and life insurance

by | Jan 18, 2017 | Firm News |

Divorce is often an unstable time. During the process, spouses in Florida are figuring out how to continue their lives separately while maintaining the same standard of living and, if children are involved, without disrupting the family structure any more than necessary. One factor which should not be forgotten among all the logistics is life insurance. According to NerdWallet, establishing a policy at the time of divorce with one spouse as the beneficiary is recommended, and even required by the court, in some cases. Most alimony and child support rulings expire upon the death of the one who pays. In such cases, the other spouse and children may be left without a means of support. A person who wishes to guarantee that his or her children are cared for, or that they may continue to live in their home, may choose to set up a life insurance policy with the former spouse as the beneficiary.

The custodial parent may also wish to have a policy in place to protect the children’s financial standing. However, the children themselves should not be named as beneficiaries, because the court does not grant the money to minors. For this reason, the former spouse could still be named on the children’s behalf, or a trust could be established and maintained by another individual who will dole the money out to the children as necessary.

The Huffington Post warns of several precautions to take while setting up a life insurance policy during divorce. First, it may be helpful for the beneficiary to be the owner of the policy. That way, the other spouse cannot secretly change the terms or the beneficiary. Another major concern is irresponsibility on the part of the one who pays. If he or she allows the payments to lapse, or did not have sufficient coverage in the first place, the beneficiary and the children may suffer the consequences in the long run. To avoid these issues, some insurance companies allow the beneficiary to require notification if payments are not being made.