Life Insurance On Divorced Ex Spouse

Written on October 13, 2016 by Bill

It’s been said that divorce can be one of the most traumatic experiences in a person’s life next to losing a loved one. An emotional and financial split can be a painful process for the couple but usually more devastating for the children.

Just because your marriage is over, it doesn’t mean the end of your obligations to your spouse or to your children. Life insurance is often required as part of the divorce decree to provide for future financial responsibilities should the ex-husband or ex-wife die prematurely. Many times when a couple gets divorced, life insurance will be a requirement as part of the divorce settlement, especially if there is alimony or child support required for either party.

Life insurance on Divorced Ex Spouse

Why buy life insurance when you get divorced? Well, the most important reason is that life insurance can cover financial responsibilities if you or your spouse die prematurely. Purchasing a life insurance policy on your ex-spouse can be one of the easiest ways to protect yourself and your children and is often required in most divorce settlements.

The spouse who is given custody of the children should make sure that the life of the noncustodial parent is insured.

“Going through a divorce can be financially challenging. This is no time to be thinking about whole life insurance.”

If you are caring for your children, you don’t want to be left in a position where your child support payments or alimony ends due to the sudden death of your ex-spouse.

The divorce decree will indicate the requirements for the life insurance policies. Such as, the amount of coverage or the death benefit, who will pay the premiums and how long the policy needs to be effective for.

One of the most common questions that I get as a life insurance agent is, “Can I buy a life insurance policy on my ex-spouse?” In many cases, the answer is yes. But there are 3 important things to consider before you buy a policy.

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1. Can I Buy a Life Insurance Policy on My Ex Spouse?

Yes you can but you need to prove to the insurance company that you have “insurable interest.” Insurable interest means that you will sustain a financial loss or lose financial support in the event of the insured’s death. Unless insurable interest can be established, the insurance company could decline the application for life insurance.

2. Does My Ex Spouse Need To Know About The Insurance Policy?

Your spouse will definitely know about the policy because he or she will have to submit to an insurance company medical exam and sign the application. If you are buying a life insurance policy on your spouse, you will be the owner, the payor and the beneficiary. Your spouse will only be the insured. Being the owner of the policy gives you the control over the policy. You can change the beneficiaries, change the payment mode or even decrease the coverage amount if necessary.

3. Can My Ex Spouse Cancel The Policy Without Me Knowing?

If your spouse had been required to buy a life insurance policy as part of the divorce settlement he or she must maintain that policy according to the terms of the divorce decree. But of course, not everyone plays by the rules. To make sure your spouse doesn’t cancel the policy or not pay the premiums there are safeguards that can help protect you.

If you are the beneficiary of the policy here is how you can monitor the policy to make sure your ex keeps the policy in force:

  • Request a duplicate bill from the insurance company
  • Set up automatic notification if premiums are missed or not paid
  • Call the insurance company to verify payment

Term Life Insurance For Divorced Spouse

Life insurance requirements for a divorce settlement can be as short as only a few years or as long as 30 years or more. Generally, it is required to last until the mortgage is paid off or the kids are out of college. Most likely, term insurance will be the best choice because it will be the most affordable. Going through a divorce can be financially challenging so this is no time to be thinking about whole life or an expensive policy.

Depending on the length of time the policy needs to be held for, there are several options for term life insurance.

Level term insurance is available for various time periods. You could purchase a 5, 10, 15, 20, 25 or 30 year term policy. The price and the death benefit will never change during the term period as long as premiums are paid. Once the term is over the policy ends and if coverage is still required, a new policy must be purchased. Some policies will allow renewal, but this comes at a much higher cost. Sometimes more than 10X the initial cost.

Annual Renewable Term is where the premium or cost is based on the current age of the insured but increases each year as the insured gets older. This type of policy will be less expensive for younger divorced spouses who may be struggling financially but as you age, the policy becomes much more expensive.

If you need help or have any questions regarding life insurance, feel free to contact us at: 914-633-1717

About Behr Insurance
About Behr Insurance

Bill Behr has been helping people make smart decisions regarding life insurance planning for more than 20 years. While most insurance advisors attempt to be everything to everyone, Bill focuses on the life insurance needs of families and business owners. Contact me directly at: 914-633-1717 to learn how you can save money.

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