Life insurance will remain in force as long as premiums are paid. In divorce situations you may need to change ownership of the policy if it is owned by the spouse and you may also need to change the beneficiary. Sit down with your agent or contact a good local agent and discuss your individual needs and options.
If there are no changes to policies in force nothing changes. But life insurance is personal property. Personal property is generally listed and is divisible property in divorce proceedings; especially of permanent cash value policy is in force. If there are changes in policy ownership either by agreement or court order, it is possible that cash value gain in the contract will be subject to ordinary income tax.
President/Broker, All HORIZON FINANCIAL SERVICES CORP., West Palm Beach, Florida
In some divorce proceedings you may be required to maintain Life Insurance Coverage for a specific period of time especially if children are involve.Consult your Agent to prepare a plan that suit your individual needs. If health issues will prevent a policy or new coverage changing Beneficiary may be your answer.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
Divorce creates difficult life insurance situations, particularly when spousal or child support is involved. It is very important to insure the life of the person providing the support, however, it is best to own and pay for the insurance. Another area of great concern is employee benefits. The beneficiary designations are often overlooked and when the employee dies the current spouse is surprised to learn that all the payments go to the former spouse.
Life & Health Insurance Agent, The Tooker Agency, Riverhead NY
Sometimes when getting divorced one party will "take over" the life insurance of the other party. Their assumption is that if they make the premium payments then they will have control over the policy. This is not the case, the other party needs to sign a change of owner form. If this is not done you will be paying the premium on a policy that you have no control over. Your ex-spouse will have the legal right to change the beneficiary if he is the owner, regardless of who is paying the premiums.
Also, if your life insurance policies predate your divorce and you are supposed to be the beneficiary of your ex-spouses policy (or vice versa), you should find out if you live in a Divorce Revocation state. If so, it is very important that you update the beneficiary designations using the correct terminology. Failure to do so could be catastrophic. In a Divorce Revocation state you could be listed as the beneficiary of your ex-spouses policy but still not receive the death benefit. One simple change can avert this problem
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Also, if your life insurance policies predate your divorce and you are supposed to be the beneficiary of your ex-spouses policy (or vice versa), you should find out if you live in a Divorce Revocation state. If so, it is very important that you update the beneficiary designations using the correct terminology. Failure to do so could be catastrophic. In a Divorce Revocation state you could be listed as the beneficiary of your ex-spouses policy but still not receive the death benefit. One simple change can avert this problem