Life Insurance – Important for Divorces

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All divorce settlements should have life insurance provisions. A life insurance policy maintained by the spouse who pays child support or alimony should cover these support payments until the payments’ natural end. What does this mean?

Child support should be covered until the children are emancipated, that is, on their own. This could mean approximately 18 if a child doesn’t attend college or approximately 22 or 23 if a child attends college. Possible college expenses should be added in. Alimony should be covered until the alimony term ends, or to retirement age if there is no set time for alimony to end.

Don’t forget that the spouse who receives child support should maintain a life insurance policy too, because residential custody would usually be transferred to the other spouse if the custodial parent dies.

There are other issues as well. The beneficiaries of the life insurance policies should be the children (if only child support is covered) or the children and the other spouse (if alimony is covered too). The other spouse should be the “trustee” of the life insurance proceeds. The insured parties should provide proof every year that the policies are current. Tax, retirement benefits and social security issues should be considered. And since every year results in one less year of support to be covered, the required policies may (but not always) be reduced from time to time.

Life insurance is an important part of every divorce settlement. Call us anytime if you would like to discuss this or any other divorce issue.