A divorce has many consequences and a life insurance policy is certainly a factor. In addition to any financial and emotional difficulties faced, you made need the help of your Connecticut life insurance company representative to help with special concerns about your coverage. Plans for these changes should begin before your divorce becomes final.
For example, you may wish to revise the selection of life insurance beneficiaries. If you have children, your insurance concerns could center on whether you are granted custody. Often in marriages one spouse will maintain insurance for the entire family, but the breakup of a marriage can obviously have serious insurance consequences for the other spouse, particularly if he or she was not employed outside the home.
Considerations for the custodial parent
In order to protect yourself and your children (if you’re receiving alimony or child support payments), purchasing a life insurance policy on your former spouse might be a wise decision. If you can’t get new insurance on your former spouse, look into having his or her existing policies transferred to you as the new policy owner and beneficiary. This could be agreed on as part of the divorce settlement, just make sure that you’re designated as the outright policy owner or as the irrevocable beneficiary.
Considerations for the noncustodial parent
You’ll likely want to ensure that your children are protected financially even if you don’t have custody. In addition, you also may have responsibilities to your former spouse and can benefit by paying for a new policy on your life for the custodial parent. This will allow you to keep any policies you currently have and protect your children’s future at the same time. The policy can be given to your former spouse free from gift tax if given either before or as part of the divorce agreement.
Change in beneficiaries at divorce
To make changes to the beneficiary on a life insurance policy simply call up the insurer and request the appropriate paperwork. You can designate any person or entity to be the beneficiary, although some states require that the beneficiary have an insurable interest in your life. If a court has ordered, for instance, that you must continue an existing policy with your former spouse as beneficiary, you won’t be able to change it. For questions pertaining to this important life event speak to an agent at your Connecticut life insurance company today.