Life Insurance and Divorce

two people analyzing a contract

Although it can be a lengthy process, once your divorce is finalized, it should not take long to divide your property, settle up accounts, transfer titles, and address retirement benefits. One thing that cannot be rushed, however, is the matter of life insurance policies. Such policies are often required to protect child support and/or alimony payments – that are owed by one ex to the other – in the event that the person making the payments should die before the financial obligation ends.

Life Insurance Policies that Are Intended for Child Support

If the life insurance policy is intended to address child support and childcare, the following should apply:

  • The life insurance policy should be in the name of the parent who has the child support obligation.

  • The policy should make clear that the named beneficiary (the other parent, a court agency, or a third party) is responsible for using the proceeds to support the child named.

  • The amount of the life insurance policy should be adequate to cover the core child support amount, but it can include additional benefits, such as the child’s health insurance. (Related: Keeping Your Health Insurance after a Divorce)

  • Additional considerations beyond factoring in the duration of child support payments include any additional needs, such as if any of the children have special education or healthcare needs or if the parent chooses to cover any higher education costs.

It’s important to point out that this policy should also address coverage for the recipient of the child support payments in the event he or she should die (and the parent paying child support would need to take over raising the children, which is a more considerable financial burden). Finally, this policy should be reviewed each year (as the financial responsibility decreases).

Life Insurance for Alimony

Alimony obligations should also be secured by a life insurance policy. The amount will depend upon whether the alimony is rehabilitative (intended to allow the recipient to obtain the education or training necessary to become financially independent) or permanent (which is generally reserved for situations in which the recipient has a disability that prevents him or her from being financially self-sufficient and in which the marriage was of considerable length).

Additional Considerations

As with everything else related to divorce, life insurance considerations are complicated. Calculating what is known as the current day value (the amount that, if properly invested, would pay the support in question as it becomes due) isn’t the end of the matter. There are additional factors that must be addressed. For example, if the ex who is required to obtain the life insurance policy is not in good health, it can make obtaining coverage very difficult – and other assets may need to be set aside in substitution of the policy.

Discuss Your Concerns with an Experienced Killeen Divorce Attorney Today

Brett Pritchard at The Law Office of Brett H. Pritchard in Killeen, Texas, is a resourceful divorce attorney who has considerable experience helping clients like you resolve their divorce-related life insurance needs. Your case is important, so please do not wait to contact or call us at 254-501-4040 today.

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