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Life Insurance and Divorce....Who's entitled to what?
The following information regarding divorce and life insurance policies can help you understand some the issues that need to be considered during divorce negotiations. In many divorces that include provisions for alimony or child support, it is a common practice to include a stipulation that the supporting spouse should carry a life insurance policy. This can guarantee that the children will still be provided for should the supporting parent die. How long the policy is maintained depends on what the policy was intended for. If it was meant as security for child support, it can be terminated when the dependent children reach the age of 18 or it can be maintained for longer periods of time if the parent so chooses. If this type of policy is required to guarantee alimony, it may continue for as long as the alimony payments are required. When negotiating your divorce settlement, it is important to designate who will be the owner of this type of policy. This is a key factor because the owner controls the policy and has the right to name the beneficiaries. One way to insure that the policy is maintained as stipulated in the divorce settlement is to name the custodial parent as the owner of the policy. You can also include provisions in your settlement agreement that if the policy is allowed to lapse or if the beneficiary designation is changed, you or your children would be entitled to part of your ex's estate equal in value to the death benefit.
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