Filing for a divorce requires you to think about many different issues. Amidst the confusion caused by asset splitting, child support, and alimony obligations, most people tend not to think about insurance. However, acquiring life insurance is usually advised by divorce lawyers, as a life insurance policy will help you fulfill your financial duties stated in the divorce agreement when you die.
Addressing the loss of a primary caregiver
Getting a life insurance as a primary caregiver is a smart move. It will provide money for the care if the present parent providing the child care dies. A primary caregiver can purchase a life insurance and name their ex-spouse as the beneficiary.
The ability to name and change a beneficiary easily cause trust issues among divorced couples. Luckily, there are now divorce agreements that can allow you to check up on the policies to make sure they’re paid up and have the correct beneficiaries. Or you can always get your spouse a policy and name yourself the beneficiary. However, this will obligate you for payments, but gives you the power to choose the beneficiaries.
Naming a minor as your beneficiary can be a big mistake. The life insurance company won’t give insurance benefits to a minor directly. But you can name a trust as the beneficiary on behalf of your children and have a trustee to handle the money according to your request.
Life insurance can fulfill commitments
Divorce settlements and alimony payments keep you financially committed to your ex-spouse. Sometimes, you can be required to purchase a term policy to provide child support and alimony payments. Modify your life insurance obligations to when you want to end your support payments. This way, you’ll make sure that the policy is only valid for a specific period of time.
Mortgage and education fees
A policy with your ex-spouse named as the beneficiary will cover the costs of your child’s education fees when you die. If you’re still living in the marital home with your children, it's also recommended to get one of these policies so they would be able to pay off the mortgages and keep the house.
Existing life insurance policies
Even if you already have an existing life insurance before your divorce, it is still advisable to get a new term life insurance policy to fulfill your divorce obligations. This will give you the freedom to change the beneficiaries in other policies you have, such as the insurance from your workplace.
At Covensure Brokerage, we aim to provide comprehensive insurance policies that makes your life easier. You can get more information about our products and services by calling our agency at (248) 572-1580. Get your free quote today.