Life insurance is between a designated insurance policy holder and a person
in which the policy holder will promise to pay a specific beneficiary
a set amount of money upon the insurer’s death. Life insurance policies
may be received before the insurer’s death in the instance of their
terminal illness or if they are in critical condition depending on the
specific situation. This policy is a way in which a person can have a
sense of confidence in the financial security of their beneficiary after
they pass away. The question that many people then have is how is that
affected in the instance of a divorce? Often times, the law only requires
one of the parents to maintain their life insurance policy plan for their
children to receive later on in life, or in the event of a tragedy. According
to Life Insurance News, they state they often times people can make simple
mistakes regarding their life insurance policies during the season of
their divorce. Unfortunately though because these policies are consider
to be “assets” in the divorce, once it is finalized they cannot
be rearranged.
A few things to remember about your policy during the
divorce would be that your policy states the exact number to be paid to your beneficiary
upon your death. You don’t want your policy to merely say it exists,
but rather say the specific amount hat is to be paid to the benefactor,
an amount that is reasonable to cover a mortgage for example, etc. Another
small but important detail to be aware of is the lapsed policy. Make sure
that your beneficiaries name is on the policy so that if for some reason
your payments stop, they will be notified. If the insurer fails to make
payments then their plan can end, and if they chose to reapply for it
the chances are that the premium would increase significantly. Lastly,
be aware that in the time of a divorce, the beneficiary recipient cannot
be switched. This can be avoided by having your beneficiary become the
owner of the plan, while you as the insurer will continue the payments;
they will have full control of it, even in the event of a divorce. Having
a lawyer who properly understands policies in relation to a divorce is crucial,
contact Hutchinson Law today for more information!