When getting a divorce, many couples worry about how to split the assets. No matter how much or how little the couple has, both parties may feel concerned about losing a home, giving up a car or losing retirement savings. However, few people stop to think about the existing life insurance policies.
NerdWallet recommends changing the beneficiaries on life insurance policies. However, some divorce settlements may not allow this. It also recommends that the custodial parent take out a life insurance policy for the person paying child support.
Inclusion in the divorce process
Forbes reminds divorcees-to-be that some state laws do require divorcing parties to declare insurance policies alongside assets and liabilities as part of the divorce process. New Jersey, for instance, may require an Affidavit of Insurance Coverage from each divorcing spouse if the parties intend to file a contested divorce. Couples may even need to disclose recently canceled policies.
Recommended questions
When going through a divorce, many people decide to hire financial professionals. These are just some of the many questions worth asking as soon as possible:
- How do I calculate a good estimate of how much life insurance may cost me?
- What will happen to the existing policies after we finalize the divorce?
- How do I know if my ex has life insurance?
- How can I determine if I am insurable?
- Will I have any obligations to my ex regarding life insurance after the divorce?
Forbes also shares that when one spouse must pay alimony or child support, that person may face a requirement to keep a life insurance policy in place. The individual may also need to name the child or the ex as the beneficiary.