Getting a divorce usually involves both parties splitting up the assets and expenses in a fair and equitable manner. If you stop and think about it, your life insurance policy is an asset that can potentially be worth quite a bit of money. As an asset, as well as an expense, the division of your life insurance policy may be somewhat difficult to figure out unless you hire the services of a qualified insurance agent or family law attorney.
How Is Life Insurance Split in a Divorce?
Dividing up your life insurance policy during a divorce is important, especially if you have children to take care of. Life insurance policies can be split in several ways, depending on the type of policy you have. Most policies include equity, or cash value. In some cases, the cash value, as well as the death benefit, can be considerably large. The payouts, premiums, and general ownership of the policy must be divided up in such a way that it is fair for both parties and their children are properly cared for.
Is Life Insurance Part of the Divorce Settlement?
In most cases, life insurance carries enough cash value to be considered as part of the divorce settlement. Any divorce arrangement generally requires the division of valuable possessions. If you had previously named your spouse as the beneficiary, you may no longer want them to inherit your death benefit once you are divorced. If you have children, a trustee can be named to oversee how the money is spent and ensure that your children are properly taken care of.
Can You Take out a Life Insurance Policy on an Ex-Spouse?
There are instances during a divorce when one parent allows the other to take out an insurance policy that will provide them with child support in case something happens to either of them. However, for this to happen, both parents must agree to the policy as well as the amount. They must also agree on how the money would be used.
Does Divorce Change Life Insurance Beneficiaries?
Changes in beneficiary will depend on whether or not children are involved and if the divorce is amicable. Couples who get divorced and remain on good terms may be fine with the other being their beneficiary. Others will leave the beneficiaries in place for their children’s sake. When the divorce leaves both parties at odds, a trustee or third-party attorney may be listed as the beneficiary to prevent any future arguments.
Divorce can be a difficult time to get through. When it comes to your life insurance, don’t make it any harder than it has to be. Contact our team at J. Archer Insurance Group. Serving Houston, Texas and beyond, we are willing to assist you with your coverage needs today!