Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Maybe better put as can Life insurance be effected by a divorce? The answer is "yes". The court can degree as part of the settlement that life insurance is maintained and beneficiary be illrevocable for a certain number of years.
For example, say children are involved and support is required. The court could mandate that life insurance is carried for a certain number of years and that a trust for the children's benefit be created upon death to continue support payments.
So a life policy could be effected by divorce through legal process.
One thing to consider as well is if no requirements are set by the courts, the last stated beneficiary would be the one to receive life insurance proceeds. So failure to change the beneficiary would result in a pay out to someone the insured no longer intended the proceeds to go to. A change of beneficiary form is easy to get and easy to use and becomes part of the policy once submitted to the insurance carrier. You can contact your agent or even the company directly for this form.
+1 Larry's answer. I will add that cash values in Life Insurance can also play a role. They can be considered an asset and the owner of the policy could be made to buy the other party out. Note the owner and the insured may not be the same person. On that note, a decree could also dictate who will be the owner of a policy going forward. Example: If I and my wife own policies on each other.
Larry and Lee have good information. I will add one more thing. Sometimes you had a policy with your spouse where either you or your spouse were a secondary insured on their policy. You usually won't want to leave it that way.
If you were the main insured, you are paying the extra premium to cover the rider of your ex-spouse. You might want to leave it if you are the beneficiary but you want to be aware of it and be aware of your options.
If you are the rider on your ex-Spouse's policy you have a bigger problem. You should take out new coverage on your own. Do not trust that your Spouse's policy will always be there to cover you.
There are a lot of variables here. Work with your insurance broker and get good advice.
Divorce does not automatically affect life insurance. Unless the policy owner makes changes to the policy, either by choice or court order, the policy will remain the same. That is why it is important to attend to your life insurance after a divorce, or your death benefit may go to the wrong person.
Life & Health Insurance Agent, The Tooker Agency, Riverhead NY
New York and some other states are known as "divorce revocation states." There is a provision in the N.Y. Estates Powers and Trusts code that automatically revokes an ex-spouse as beneficiary of a life insurance policy. Under certain circumstances this little known provision can wreak havoc on the lives of a surviving parent and children when an ex-spouse dies.
The law states that your spouse is automatically revoked as beneficiary of any life insurance policy as soon as you are divorced, even if you don't want them to be. There is a way this can be addressed, but it requires that the policyholder take action.
Let's assume your husband has a $500,000 life insurance policy and you are the beneficiary. You are getting divorced and you both agree that you will work together on any issues involving your children. Your marriage is bad, but you still work together as parents. Your husband says that he will leave you as beneficiary of his life insurance policy until the kids are self supporting.
If he just "leaves" you as the beneficiary, you will no longer be the beneficiary as soon as you divorce. The state of New York has determined that by the act of the divorce itself you are no longer legally his beneficiary. If he dies without having taken any action, the contingent beneficiary will get the proceeds, not you.
In order to fix this, your now ex-husband needs to complete a beneficiary change form and make you the beneficiary again, this time listing your relationship as "ex-spouse." It's a small technicality but not addressing it could be financially catastrophic. By naming you as his beneficiary and ex-spouse after the divorce, you are now legally the beneficiary again.
I saw one case where the wife "took over" her ex-husbands life insurance policy to make sure the policy stayed in effect and she remained the beneficiary. She had been paying the premium for many years when her ex-husband passed away. When she filed the death claim she was told that because the beneficiary designation predated the divorce she had been revoked as beneficiary. The benefit was paid to someone else.
If you are divorced and you or your ex-spouse's life insurance predates the divorce, it's critical that you find out if yours is a divorce revocation state. If it is, update your beneficiaries.
I apologize for the very long post, but there are many women (and men too!) that need to be aware of this.
Divorce does affect life insurance but maybe not in the way you are asking your question. It does not affect your premiums or cost but it will affect other aspects of your policy. The first thing that needs to be addressed is the beneficiary. You may not want your ex to receive your life insurance proceeds. Next aspect to be examined is your face amount. Now that you are on your own, do you have the proper amount of life insurance for children, loved ones to cover debt, etc.? Last is the term or type of policy. Are the premiums guaranteed for the proper amount of time? I recommend sooner rather than later sitting down with your agent to address these needs before it becomes too late.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Life insurance is a contract between an insurance company and the owner. The subject of the insurance, the insured, may be someone other than the owner. The owner is the person with the power to change the beneficiary. In a divorce settlement care should be taken to identify the owner of the insurance. Existing insurance is difficult to handle in a divorce settlement. When alimony and/or child support is involved it is often better to have the recipient of those payments purchase and own a policy of life insurance on the party paying the alimony or child support. By doing that all of the control over the policy is in the hands of the recipient, to include the power to change the beneficiary.
The other major area of concern involving divorce and life insurance is company sponsored life insurance. Often this is overlooked and the intentions of the court and the desires of the beneficiary thwarted if ownership remains in the hands of the other party. The employee can merely call the HR department and changes the beneficiary to someone else.
.JPG){kind=avatar}
For example, say children are involved and support is required. The court could mandate that life insurance is carried for a certain number of years and that a trust for the children's benefit be created upon death to continue support payments.
So a life policy could be effected by divorce through legal process.
One thing to consider as well is if no requirements are set by the courts, the last stated beneficiary would be the one to receive life insurance proceeds. So failure to change the beneficiary would result in a pay out to someone the insured no longer intended the proceeds to go to. A change of beneficiary form is easy to get and easy to use and becomes part of the policy once submitted to the insurance carrier. You can contact your agent or even the company directly for this form.
If you were the main insured, you are paying the extra premium to cover the rider of your ex-spouse. You might want to leave it if you are the beneficiary but you want to be aware of it and be aware of your options.
If you are the rider on your ex-Spouse's policy you have a bigger problem. You should take out new coverage on your own. Do not trust that your Spouse's policy will always be there to cover you.
There are a lot of variables here. Work with your insurance broker and get good advice.
The law states that your spouse is automatically revoked as beneficiary of any life insurance policy as soon as you are divorced, even if you don't want them to be. There is a way this can be addressed, but it requires that the policyholder take action.
Let's assume your husband has a $500,000 life insurance policy and you are the beneficiary. You are getting divorced and you both agree that you will work together on any issues involving your children. Your marriage is bad, but you still work together as parents. Your husband says that he will leave you as beneficiary of his life insurance policy until the kids are self supporting.
If he just "leaves" you as the beneficiary, you will no longer be the beneficiary as soon as you divorce. The state of New York has determined that by the act of the divorce itself you are no longer legally his beneficiary. If he dies without having taken any action, the contingent beneficiary will get the proceeds, not you.
In order to fix this, your now ex-husband needs to complete a beneficiary change form and make you the beneficiary again, this time listing your relationship as "ex-spouse." It's a small technicality but not addressing it could be financially catastrophic. By naming you as his beneficiary and ex-spouse after the divorce, you are now legally the beneficiary again.
I saw one case where the wife "took over" her ex-husbands life insurance policy to make sure the policy stayed in effect and she remained the beneficiary. She had been paying the premium for many years when her ex-husband passed away. When she filed the death claim she was told that because the beneficiary designation predated the divorce she had been revoked as beneficiary. The benefit was paid to someone else.
If you are divorced and you or your ex-spouse's life insurance predates the divorce, it's critical that you find out if yours is a divorce revocation state. If it is, update your beneficiaries.
I apologize for the very long post, but there are many women (and men too!) that need to be aware of this.
The other major area of concern involving divorce and life insurance is company sponsored life insurance. Often this is overlooked and the intentions of the court and the desires of the beneficiary thwarted if ownership remains in the hands of the other party. The employee can merely call the HR department and changes the beneficiary to someone else.