Getting a divorce means making changes. Every aspect of your current lifestyle will be altered, and your life insurance needs are no exception. However, just because you’re getting divorced doesn’t mean you should drop your life insurance altogether.
If you and your ex-spouse don’t have children, and there isn’t anyone else relying on you for support, you probably won’t need as much life insurance as you did when you were married. But there are instances in which getting a divorce increases your need for life insurance, such as when:
- You are the parent of dependent children and must contribute to their support.
- The court approves a divorce settlement that requires you to carry a certain amount of life insurance with your ex-spouse as the named beneficiary, the proceeds from which will be used to support your children in the event of your death.
- The coverage you previously had is terminated as a result of the divorce.
In addition to revisiting the amount of life insurance you carry, you may also want to change your beneficiary. If your ex-spouse is the named beneficiary on your life insurance policy, and you plan to change that designation, be sure you comply with your divorce decree. If your settlement agreement requires that you maintain your ex-spouse as the beneficiary of your life insurance, you cannot legally remove them.
Remember that if your ex-spouse was designated as your beneficiary when you purchased the policy, getting a divorce doesn’t necessarily alter that. In some states, divorce automatically invalidates the ex-spouse as the designated beneficiary. However, please don’t assume you live in one of them. Talk to your attorney and verify it.
Another point to remember is that specifying a change of beneficiary in your will doesn’t supersede the beneficiary designation stated on your life insurance policy. The only way to remove your ex-spouse as your beneficiary is to execute a change of beneficiary with your insurer. Your insurance agent can help you with the necessary paperwork.
If you do change your beneficiary, don’t name a minor child. Insurers will not pay the proceeds from a policy directly to a little. The probate court may require that a trust be established and a guardian appointed to manage the proceeds of the procedure until the child becomes an adult.
If you are a recent divorcee, you should talk to Brian Gruss about evaluating your situation and recommending products that suit your current needs.