Life Insurance after Divorce
Divorce can lead to many complications
in anyone’s life. There are normally
increased financial obligations and strains
as well as questions on what to do about
important things such as insurance. Life
insurance is often times a prominent topic
to think about when a divorce occurs. Many
people wonder if they need life insurance
after divorce, and in most cases the answer
is yes. On Insurance.com there are many
helpful articles dealing with just about
any insurance topic or question you may
have. The article, “Do you still need
life insurance after divorce,” answers
some of these tricky questions that pop-up
after divorce and gives some helpful advice.
“You might think that because you're
single now, you need less life insurance
or even no life insurance at all. But this
isn't necessarily true. If you don't have
children, and no one else is relying on
you for support, divorce will probably reduce
your
need for life insurance. After all,
the main purpose of life
insurance is to protect loved ones that
are relying on your income. But in some
cases, divorce will increase your need for
life insurance,” according to the
article.
There are many reasons why life insurance
could be a vital asset after divorce. The
author lists some terms that may make having
life insurance after a divorce an extremely
good idea. Some of the reasons would be
if you, “Have children who are relying
on you for support (whether or not you are
the custodial parent), have increased financial
obligations, lose coverage you previously
had, or want to ensure that child support
or alimony will continue to be paid.”
The fine print of a divorce is always important
to keep in mind when sorting everything
out after. The terms of divorce have an
impact on your policies and decisions as
well. “The terms of your divorce settlement
may also affect your need for life insurance.
For example, if you are responsible for
paying child support or alimony, you may
be required to buy
life insurance with your ex-spouse as
beneficiary or maintain life insurance coverage
you already have. An insurance agent or
a financial planner can help you evaluate
your coverage needs and options.”
If you already had life insurance when you
were married there are also a few important
things to keep in mind. You should update
and carefully review your policy after the
divorce to make sure everything is in order.
“If your ex-spouse is the named beneficiary
of your
life insurance policy, he or she will
be entitled to receive the proceeds when
you die. To avoid this, update your beneficiary
designations. Your insurance agent can help
you with the necessary paperwork. If you
don't have an agent, you can always call
the insurance company and ask to speak to
someone in the policyholder service department
for more information. But don't name a minor
child. Insurers generally won't make settlements
directly to minors, and the probate court
handling
your estate may require that a trust
be set up, and a guardian appointed, to
manage the proceeds.”
