You’ve always been the responsible sort, so you purchased life insurance policies that were designed to protect you, your spouse, your kids and your business.
Now that you’re getting a divorce, however, those policies can’t be treated like an afterthought. In fact, they need to be part of your divorce negotiations from the very start. Here’s what you need to do and consider:
1. Inventory all your policies.
This means checking their face value, the current cash surrender value and the designated beneficiaries. Don’t assume that you remember them all. The details on an insurance policy’s terms can get pretty fuzzy over time. Don’t make any changes, either, until your attorney or the court says that you can. (During most divorces, early orders from the court will include a stay that legally prohibits you from making any changes to your insurance policies.)
2. Consider the purpose of your insurance policies.
You may be divorcing your spouse, but that doesn’t necessarily mean that you won’t still need just as much insurance as you currently have. You may simply need to redirect its use.
If, for example, you owe joint debts with your spouse, your insurance policy can guarantee that your obligation will be met (and encourage your spouse to agree to an easier, prolonged payment schedule) even if you pass away. If you plan on paying for your child’s college education, your policies could do the same in the event of your premature death.
An experienced divorce attorney can help you determine the best way to handle your insurance policies during and after your divorce.