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What effects does divorce have on life insurance?If you’re recently divorced, consider the impact on your life insurance policies.Life insurance, more than most things you own, is intimately tied to your life circumstances. When changes occur, you need to review existing policies to make sure beneficiaries are correctly designated. You and your heirs will be living with your decisions for years. "Life and death" points to consider: Certainly, don’t assume your insurance agent is aware of your changed marital status. If your "ex" is your beneficiary and you do not change the designation, he or she may receive the proceeds upon your death. If a beneficiary designation simply reads "wife of the insured" or "husband of the insured" and you do not remarry, the secondary beneficiary will receive the proceeds. Is this what you intend? If not, changes are easy to accomplish with the help of your agent. Policy ownership rights may be transferred as part of a property settlement or as a way to ensure continuation of alimony payments. As alternatives to transfer, you can: 1) take out a new cash value policy with your "ex" as owner; 2) provide that your estate use insurance proceeds to continue alimony payments after your death; or 3) have your "ex" buy a new policy on your life—he or she can make the premium payments or the divorce agreement can specify that you are responsible for payments. Divorce can be tumultuous enough without insurance complications. By all means, consult your lawyer and tax adviser about your insurance policies. And be sure to talk to your independent insurance agent.
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