Monday, April 18, 2011

The Effects of Divorce on Life Insurance Claims

Getting divorced may have a profound effect on your life insurance policies. In some cases, the divorce court may require you to obtain life insurance or modify your existing policy.

Every situation is different, and although divorce is not uncommon, its effects on your own life insurance policies will be unique. If you are in the middle of divorce proceedings, or soon will be, you should familiarize yourself with the basics regarding life insurance claims, beneficiary designations and how divorce may impact your coverage.

Divorce Decree

Many divorce settlement agreements require one or both spouses to obtain life insurance. The purpose of this coverage is to protect the financial well-being of the other spouse with regard to alimony and child support.

Typically, each spouse names the other as the primary beneficiary on these new policies. In the event that one spouse dies, the other files a claim with the life insurance carrier and collects a benefit sufficient to replace the income lost.

Contractual Obligations

A life insurance policy is a legal contract between you and the insurance company. Your obligation is to continue paying the premium, and the carrier’s obligation is to pay your family the agreed-upon sum of money if you die while the policy is still in force.

Getting divorced does not directly impact your agreement with the insurance company. Only a formally executed contract change request can alter or modify your life insurance policy.

Changing Beneficiaries

If getting divorced has caused you to reconsider your beneficiary designations, changing the beneficiaries on your policy can be done with minimal time and effort. As the owner of the policy, you retain the right to update beneficiaries at any time by simply completing a new beneficiary designation form.

No one other than the policy owner has authorization to make such changes to an existing life insurance policy contract.


Perhaps the most common misconception regarding the effects of divorce on life insurance claims involves wills. After divorce, many people immediately change or update their estate planning documents to remove or otherwise exclude their former spouse as a recipient of any assets.

However, simply updating your will typically does not affect life insurance beneficiary designations. If you change or will but neglect to remove your former spouse as a beneficiary on your life insurance policy, she will still receive the policy proceeds if you die.

This article is a Twisted Nonsense Exclusive! (04/18/2011)

No comments :

Post a Comment