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Life Insurance During and After a Divorce

Sorting out life insurance is part of the divorce process. The way it impacts your divorce, however, will depend on your particular situation. Read on to learn about life insurance during and after a divorce.

How life insurance works during and after a divorce

If you have a life insurance policy, you can maintain it to help provide financial support for your ex-spouse or children. In the event that the plan has a cash value component, it may be considered a marital asset and divided among you and your ex. You may be required to keep your policy if alimony or child support is involved in your divorce. Additionally, in certain situations, you can transfer the policy to your ex.1

Is life insurance a marital asset?

Life insurance may be a marital asset, depending on the type of policy you have. If you have a permanent plan like whole or universal life insurance, it’s considered a marital asset since it has a cash value component. Since a term life insurance policy doesn’t come with cash value, it’s not considered a marital asset.2

Who will pay life insurance premiums after a divorce?

If you’re awarded custody or alimony, your ex-spouse may need to have a life insurance plan and be responsible for the premiums. However, if you are able to take ownership of the policy you’ll need to pay the premiums yourself to prevent a lapse in coverage.

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Can I keep a life insurance policy on my ex-spouse?

Typically, you can’t keep life insurance on your ex-spouse. This is because many states believe that you don’t have an insurable interest in your ex anymore.1 But if there is an insurable interest because your ex must pay alimony, for example, you might be able to keep the policy. Often, exes have a legal obligation to maintain and pay for life insurance to help cover families that rely on them for financial support.

Should I change my life insurance policy after a divorce?

If you have a life insurance plan and your ex-spouse is listed as your beneficiary, you may want to consider changing your beneficiary designation. In the event you and your ex-spouse don’t have any children, for example, it doesn’t make sense to keep them as a beneficiary. To change your beneficiary, you typically need to contact your life insurance company and submit a change of beneficiary form.

Life insurance issues that can occur with a divorce

Here’s an overview of a few life insurance issues that can occur with a divorce:1

Changes in the policy or designated beneficiaries

The policy owner might change the beneficiary but fail to notify the other spouse. They could also stop paying premiums or even allow the policy to lapse on purpose.

Insurance obligations

Life insurance needs are not set in stone and may change. Depending on the details of the divorce agreement, a spouse may be allowed to reduce the coverage or add a new beneficiary to receive part of the death benefit.

Reallocation of support

Finances may also change for you and your ex-spouse during a divorce. If the alimony recipient starts to earn far more than the payor, for example, a reallocation of support might be necessary.

Types of life insurance to consider after a divorce

If you’re considering buying a new policy after a divorce, consider these options:

Term life insurance

Term life insurance from Aflac provides coverage for a set term, which may be 10, 20, or even 30 years. If you pass away before the plan expires, loved ones will receive a death benefit, as long as you’ve paid your premiums.

Whole life insurance

Aflac whole life insurance is a permanent policy that offers lifelong coverage, meaning it won’t expire for the rest of your life. It usually comes with a cash value component, which grows over time. You can use the cash value to meet various financial goals while you’re alive.

Universal life insurance

Universal life insurance is another permanent plan that can accumulate cash value. However, it differs from whole life insurance in that you can adjust your premium payments and death benefits as your circumstances change.

Final expense insurance

Also known as burial insurance or funeral insurance, final expense insurance is essentially a whole life insurance policy that comes with more affordable premiums and a smaller payout. It’s designed to help pay for end-of-life expenses like funeral costs, medical bills, and legal fees.

Learn more about life insurance

Divorce can affect many aspects of your financial future, including life insurance. Since every divorce is unique, it’s wise to contact a divorce attorney to determine how life insurance may impact the process.

If you decide to apply for a new policy, Aflac offers term life and whole life insurance with rates to fit most budgets. Find out more information by chatting with an agent and getting a quote today.

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