Going through a divorce is tough. Thankfully, I have never experienced a divorce and hopefully never will. I have had plenty of friends and clients to go through a divorce and it is miserable for them. There are so many things to consider when getting divorced that often life insurance is overlooked. This can be a catastrophic mistake. More attorneys should warn their clients about life insurance needs and changes in the process before it is too late. When getting divorced contact your life insurance agent as well.
We saw a case of a couple that were divorced with children and no one thought to tell the ex-wife about life insurance. Her ex-husband remarried and she had full custody of the children. One day coming home from work, he was involved in a violent car wreck and died at the scene. The ex-wife understood that half of his estate would go to her children. What she didn’t know was the estate was upside down in debt and the new wife was now beneficiary of his $1,000,000 life insurance policy. She soon found out that she, nor the children, were entitled to any of that money. Life insurance beneficiaries receive proceeds without probate or the estate. She assumed her ex kept life insurance for their children and he did not. This should have been addressed in the divorce and was not. The new wife walks away a millionaire.
There are a few things to be considered when getting divorced about life insurance.
- A judge can order a party to carry life insurance to cover child support or alimony in case of death. Protect yourself and your children.
- Be sure the soon to be ex is not the owner of your life insurance policy, they can cancel it without your knowledge
- In cases of couples on the same life insurance plan, go purchase your own plan. Spouse riders can be cancelled without your knowledge
- Never let an ex-spouse pay your life insurance premiums for you. It is easy to lapse coverage and if you lose your insurability, you cannot purchase another plan
- Never assume you or your children are beneficiaries of an ex-spouse life insurance. The policy owner can change beneficiaries and it is not public knowledge
- Be sure you have enough life insurance to cover your new life. You may need more now that you are single.
Never procrastinate making changes to your life insurance while getting divorced. The stress and strain has been known to cause an early untimely death. Don’t forget to change your will for the same reasons.
Be sure your family is protected today!
“Divorce is a declaration of independence with only two signers”. —Gerald F. Lieberman
Image by Stuart Miles at www.freedigitalphotos.net
Tim Wilhoit is owner/principal of Your Friend 4 Life Insurance Agency in Nashville, TN. He is a family man, father of 3, grandfather of 1, entrepreneur, insurance agent, life insurance broker, employee benefit specialist, salesman, sales trainer, recruiter, public speaker, blogger, author and team leader with over 30 years of experience in sales and marketing in the insurance and beverage industries.