Divorce can be a confusing and emotionally draining experience, it can become more stressful when you begin to consider life insurance and how it is impacted. In addition to lifestyle changes, divorce requires changes to housing, childcare, finances, and more.
Navigating life insurance during and after a divorce can be critical in securing the financial future for you and your children. It is important to reevaluate your life insurance policy, financial goals, and named beneficiaries during the process. Depending on the type of policy and your family’s needs, life insurance after divorce can be handled in many ways.
Continue reading to learn more about life insurance and divorce, or call Final Expense Benefits at (866) 786-0725, Monday through Friday, 9 a.m. to 5 p.m. ET to speak with an agent to find a plan that works for you. Our free quoting tool is available for you to receive a free estimate at any time.
If you are looking for a plan for you and your loved ones, call our expert agents at (866) 786-0725, Monday through Friday, 9 A.M. – 5 P.M. E.T. Get started now with our free quoting tool.
How Life Insurance Works During and After A Divorce
If you have a life insurance policy, you can set it up so that it can provide financial support for your spouse or children. If the life insurance plan you chose has a cash value component, the court may consider it a marital asset and divide it between you and your ex-spouse.
It has become common for courts to require divorcing spouses to purchase life insurance policies as part of the settlement terms after a divorce. This usually happens when children are involved or when one party earns more than the other. The court can order the parties to purchase a life insurance policy to protect alimony or child support payments if the spouse responsible for those payments passes away.
Minors cannot legally own property, so if you were to pass away while they are underage, the court would need to appoint a custodian to manage the funds for them. This can be an expensive and slow process that can cause delays in benefit payments. To avoid any issues, you can set up a living trust and name the trust as your life insurance beneficiary. You would then select a trustee of your choice to manage and distribute the funds as instructed in the trust.
Types of Life Insurance To Consider After A Divorce
Term Life Insurance
A term life insurance policy will provide coverage for a set amount of time, typically 10, 20, or 30 years. If you pass away while the plan is active, your beneficiary will receive a death benefit, as long as your premiums have been paid.
Whole Life Insurance
A whole life insurance policy is a permanent plan that provides coverage for a lifetime. It comes with a cash value component which grows over time. You can access the cash value through withdrawals or policy loans.
Universal Life Insurance
Universal life insurance is a permanent plan that can accumulate cash value. This plan differs from whole life insurance in that you can change your premium payments and death benefits as you need over time.
Final Expense Insurance
Final expense insurance, sometimes referred to as burial insurance, is similar to a whole life insurance policy, but it comes with more affordable premiums and a smaller payout. This plan is best for end-of-life expenses such as funeral costs, medical bills, and any other debt.
In order to obtain a final expense insurance plan, you must apply for this coverage and upon approval, your family will receive a payout immediately after your passing. A final expense insurance plan usually doesn’t require a medical exam and is easier to qualify for than other types of insurance.
Final expense life insuranec comes in many different coverage options, typically starting at $2,000 and capping out at $50,000. It is best to lock in a a plan as soon as possible as the cost will only increase as you age. Below is a chart of sample rates for seniors seeking a $10,000 burial insurance plan.
Best $10,000 Burial Insurance Companies
If you’re looking for a policy with $10,000 in coverage that remains instated throughout the remainder of your life at the premium you locked in at, then we’d like to recommend a few names that may be of interest to you and your wallet.
Here are the expected monthly premiums for Final Expense Insurance for a healthy, non-smoking individual from our top providers:
| Company |
Male 50y/o |
Female 50y/o |
Male 60y/o |
Female 60y/o |
Male 70y/o |
Female 70y/o |
|---|---|---|---|---|---|---|
|
$34 |
$27 |
$50 |
$40 |
$70 |
$56 |
|
|
$31 |
$26 |
$43 |
$35 |
$71 |
$53 |
|
|
$31 |
$24 |
$44 |
$33 |
$75 |
$53 |
|
|
$34 |
$29 |
$45 |
$35 |
$79 |
$59 |
|
|
$33 |
$26 |
$48 |
$36 |
$82 |
$58 |
*These figures are estimates only, based on a $10,000 final expense insurance policy with no applicant pre-existing conditions.*
If you are interested in any of these options call us at (866) 786-0725 to learn more. Final Expense Benefits only works with top-rated carriers to provide you and your loved ones with the coverage you need.
Changes to Make to Life Insurance During Divorce
If you have an existing life insurance policy going into a divorce, you will want to ensure it is updated and serves the intended purpose. You should begin by checking over your policy to determine the amount and what kind of coverage you have, how long it will be in effect, and the named beneficiary or beneficiaries.
If you have a permanent whole life or universal life policy, contact the life insurance company to determine how much cash value has accumulated. Next, you should consider making changes to the following to ensure your policy is complete and up to your standards.
Update Your Beneficiaries
Couples typically list each other or children as beneficiaries on financial accounts and life insurance policies. If you have children but would like to remove your spouse, you can typically call your insurance company and ask to update your beneficiary. However, if children are not involved, you can remove your spouse and add another beneficiary if you prefer.
Life Insurance For Protecting Your Children
To protect your children, you can purchase a life insurance policy after divorce that includes enough coverage to replace your income until they reach adulthood. This money can also help them pay for their education or a future home.
If you were to pass away while your children are still minors, the court would need to appoint a trustee to manage and distribute funds as instructed.
Include the Cash Value In Your Net Worth
Before the divorce proceedings, you will need a detailed record of your finances, including any life insurance. If you have a whole life insurance policy, the cash value of the policy can be considered an asset because you can access the funds at any point during your lifetime.
You will be required to provide this amount in your net worth for the court to take into consideration when dividing marital assets. In many cases, the court may require you to surrender the policy and split the amount in the settlement. A term life insurance policy will usually remain with the policyholder, and you can change the beneficiary if needed.
Life Insurance On An Ex-Spouse
Most states do not allow a person to own a life insurance policy on an ex-spouse. After a divorce is finalized, the spouse is no longer considered to have an insurable interest in the other party.
While you may finalize the divorce, this does not automatically change the beneficiary on your life insurance policy. You must contact the insurance agency to request the change.
How Much Life Insurance Should I Have After A Divorce?
After a divorce, your coverage should suit your new lifestyle. In addition to updating your beneficiaries, you will need to determine if you need more or less coverage based on your beneficiary and their needs.
Our expert agents are available at (866) 786-0725, Monday through Friday, 9 a.m. to 5 p.m. ET. Our free quoting tool is available for you to receive a free estimate at any time. Final Expense Benefits only works with top-rated carriers to provide you and your loved ones with the coverage you need.
We partner with over 20 carriers, including:
Call our expert agents Monday through Friday, 9 A.M. – 5 P.M. ET at (866) 786-0725 or check out our free online quoting tool to receive an estimate.
Frequently Asked Questions
Can I Keep Life Insurance On A Divorced Spouse?
Typically, you cannot have an insurance policy on an ex-spouse because you no longer have a legal interest in insuring them. There are certain situations where the court may order your ex to maintain a life insurance policy with you as the beneficiary.
Is Life Insurance Still Valid After Divorce?
Divorce does not automatically end your life insurance policy. After divorce, the court may order you to maintain a life insurance policy for the benefit of your children, in the event something should happen to you. Additionally, your beneficiary will not automatically change after a divorce, so if you want to change the beneficiary contact your insurance provider.
Is My Ex-Spouse Entitled to My Life Insurance?
If your term life policy is owned by you, it will most likely be left alone during the divorce process. However, the cash value accumulated from a permanent life insurance policy may be part of the joint estate.
