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Divorce Effects on Life Insurance Policies

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handling-life-insurance-in-divorce-termDivorce is a stressful ordeal within itself, but if you divorced recently or anticipate a divorce in the coming months you should review your life insurance to make sure it meets your new obligations and financial situation. There is no reason to allow Divorce to complicate your lives.

Life Insurance Policy with Settlement

As part of a divorce settlement, the spouse who will be paying alimony and child support might want to consider purchasing a Life Insurance Policy. That’s because upon the death of that person, the ex-spouse would lose the alimony and child support that had been agreed on. The spouse who receives alimony or child support should beware that the former spouse at first could agree to buy the insurance then change the beneficiary or stop paying premiums and lapse the policy.

Term Life or Permanent life insurance Policy

If you are wondering what type of insurance you should buy to protect your alimony or child support obligations, most experts suggest you buy term life instead of a permanent life insurance policy which may accumulate a cash value. There are plenty of methods to keep the relationship cordial while the financial issues are sorted out.

Saving Money with Term Life Insurance Coverage

Term life insurance premiums are less expensive than permanent life insurance premiums; that is an important consideration, particularly when you are going through an expensive life change such as a divorce. Normally people will recognize a continuation of existing life insurance and disability policies if it is addressed in a divorce settlement.

Financial Support for your Family Members

If your ex-spouse has remarried and has two household incomes, or he or she makes enough money to raise the children comfortably without additional financial support, you may decide to change your beneficiary. Many people name their children as the beneficiaries of life insurance, but a minor cannot receive a life insurance benefit until age 18. If your children are under 18, you should set up a trust in which a trustee oversees the funds until the children reach a certain age. Otherwise, the insurance company will hold the benefit until the children are 18.

If there is not an actual and valid life insurance policy in place and your children are still minors, there are more points to consider. First of all the surviving parent could collect the former spouse’s social security.

Online Life Insurance Policy quotes and Divorce Finalization

For those individuals who are Wondering how divorce will affect their life insurance policy, check with your legal advisers. There are plenty of reasons to purchase a cheaper term life insurance policy online if you are becoming a single parent. There are considerations when you finalize the divorce wherein you and your children will need to be protected in the event of the death of your ex-spouse.

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