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Life Insurance Beneficiary Rules After a Divorce

Divorce can be a life-changing event, no matter how long you’ve been married. If you’re going through the process of divorce, it’s important to consider how life insurance may affect it and how to protect yourself and your family financially going forward. Here’s an overview of life insurance rules after a divorce.

How life insurance works after a divorce

Factors like the type of life insurance you have and your state’s laws can determine what happens to your policy after a divorce. If you are the policyholder on a term life insurance policy, it will likely be considered a separate asset that will be yours to keep. But if you have permanent life insurance, such as whole life insurance, its cash value represents marital assets that may need to be divided among you and your ex-spouse.1

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Are there any life insurance beneficiary rules after a divorce?

Life insurance will be addressed in your divorce terms. If you’re required to pay alimony or childcare to your ex-spouse, for example, your divorce decree may state that you must keep your ex as a beneficiary on your policy. You might also be required to buy a new policy that would pay your ex-spouse a certain amount in the event you pass away.2 It’s important to discuss your specific life insurance beneficiary rules with your divorce lawyer as every situation is different.

Does a divorce decree override a named beneficiary?

In many cases, a divorce decree doesn’t change a beneficiary designation. This means that unless the policyholder changes the beneficiary, that individual or entity will receive the payout upon the policyholder’s passing, regardless of a divorce. But this can also depend on the terms of the divorce, as certain laws may override a named beneficiary.

Can I remove my ex-spouse as a life insurance beneficiary?

Whether you can remove your ex-spouse as a beneficiary depends on the terms of your divorce. If you’re the policyholder and won’t be supporting your ex after the divorce, you might be able to remove them. But if you have to pay alimony or child support, you may have to keep them as a beneficiary.2 Consult your divorce lawyer to determine if it’s possible to remove your ex from your policy.

Should I name my child as a beneficiary after my divorce?

After your divorce, you may prefer for the death benefit from your life insurance policy to go to your child. But this might not be the best option, as most states prohibit minors from accepting life insurance death benefits. If you pass away before your child turns 18, the death benefit payout will likely be held up by the court system. In the event you do decide to name your child as a beneficiary after a divorce, be sure to appoint a custodian and create a trust.

Why you should keep your life insurance policy after a divorce

Here are some reasons to keep your life insurance policy after a divorce:

Help provide financial security for your family

Life insurance’s main purpose is to help protect your family financially in the event you unexpectedly pass away. You can do just that if you keep your policy.

You can update beneficiaries as needed

Typically, your life insurance beneficiaries are not set in stone. You’ll likely have the freedom to modify them as your circumstances change.

Can allow you to keep building cash value

A permanent life insurance policy often comes with a cash value option, which is similar to a savings account. If you keep your policy, you can continue to grow it over time.

Get a life insurance quote

Since every divorce is unique, the way life insurance will play into yours will depend on your particular situation. A qualified divorce lawyer can advise you on how life insurance impacts your divorce and what your options may be.

If you need to get a new policy, consider Aflac’s life insurance products. Aflac offers term life and whole life policies that are available at affordable rates. Start chatting with a representative today for a quote or more information.

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