Getting a divorce is a messy process. One of the messy tasks that have to be taken care of in a divorce is sorting out life insurance. It’s unfortunately one of the most overlooked processes since dividing up assets, custody battles and ensuring the children are able to adjust properly are the most important priorities.
Most married couples usually carry a life insurance policy so their spouse and children can be taken care of should they die. You’d think getting a divorce would just void the need for one, but the whole process is not black and white. It’s actually kind of complicated. In a normal, working arrangement, the breadwinner of the family purchases a life insurance policy and lists their spouse and children as the beneficiaries. Should the said breadwinner die or be maimed in such a manner that they can no longer provide for the family, the spouse and children will receive the death or injury benefits.
During a divorce, the need for life insurance changes. Normally, part of the divorce settlement should involve granting alimony for maintenance of quality of life on the part of the dependant spouse and child support to cover child care costs. However, a problem arises should the primary wage earner who was paying alimony die. The dependant partner will potentially end up with an awful financial burden they may not be able to bear.
In most divorces that include a provision for alimony or child support, it is completely normal for the court to include a life insurance stipulation with the ex as the beneficiary. This will ensure that should the supporting spouse die or suffer from a past or present medical condition such that they can no longer provide, the children will still be taken care of. If the court orders the same, it’s important that you meet the commitment.
Understandably, nobody wants to be burdened with the cost of paying for a life insurance policy while being involved in a bitter divorce. Their ex-spouse will benefit from their death after all, and virtually nobody can be alright with that. However, the amount of time the policy is maintained depends on what it was intended for. If it was as a safeguard for child support, it can be terminated when the child turns 18 or 21 depending on your state. If it was necessary to assure alimony payment, it may continue for as long as the payments are required.
At face value, these would seem like simple conditions to meet and the outcomes should be pretty predictable. However, in reality, dealing with the whole process can be quite a bother. There are intricate details involved that you as a consumer may not be able to notice or argue for or against. The cost may end up too high to sustain or be dragged out until you’re held in contempt of the court.
The first thing you need to ensure is that you contact an independent agent as soon as you can. This should be accompanied with matching orders to get the insurance meeting set and the court criteria met at the lowest possible cost. A common mistake most people make is to call up their auto and home insurance agents and ask for a deal to be put together. What they don’t realize is that most property agents aren’t as well versed in life insurance as life insurance specialists are. This ends up dragging what should otherwise have been a simple process out for no reason. More often than not, too, their rates are too exorbitant.
Second of all, if you have health complications, especially pre-existing conditions, make sure the agent you hire is well-versed in impaired risk life insurance. Be sure they shop the rates so they can increase your chances of getting a quick approval at an affordable rate.
Lastly, your top priority should actually be keeping the policy in force. This is critical unless you like being in and out of court every other day. In addition, it should always remain within your budget. A good agent should be able to negotiate with attorneys to allow the policy to remain for the shortest term possible. In the end, the only true principle that should guide the process is, ‘make sure it’s affordable and kept in force.’
The bottom line of the whole thing is, if you have been given a court ordered life insurance policy during your divorce process, get personal attention from someone who has been through the process before. A good agent should be able to get you a good rate that will stay in place for a short time. If you are currently in the process or are paying too much and believe a change is necessary, don’t be afraid to give one of our agents a call.