A part of the relationship may end, but your life insurance coverage doesn’t have to.
Getting a divorce can be an involved process for all people involved. It’s as much a discussion about the untangling of two peoples’ personal lives as it is about their financial realities as well. During this untangling, you may have questions about your life insurance after the divorce. It’s only natural ‘cause there’s a lot to consider.
- How does divorce affect finances?
- Can I change my life insurance beneficiary during a divorce?
- Life insurance beneficiary rules after divorce
- Can you keep life insurance on an ex-spouse?
- Court-ordered life insurance for divorce
- Life insurance that’s there for you through a divorce
How does divorce affect finances?
Getting divorced affects people’s finances more than just paying for lawyers. People often experience a drop in their standard of living after a divorce. For people over 50 you might even expect your wealth to drop by half after finalizing the separation. This is called “gray divorce” and can affect women significantly. With such drastic effects, it’s important to stay one step ahead with your life insurance policy.
Decreased standard of living after divorce by gender
Can I change my life insurance beneficiary during a divorce?
When it comes to life insurance beneficiaries, it’s always good to keep your list updated to your most-recent needs. Now, married people tend to name their spouse their primary beneficiary. But when it comes to major life changes, such as the death of a loved one or divorce, it’s important to ensure your beneficiaries are as up-to-date and accurate as possible.
What will you need to change a beneficiary? You’ll need their full legal name, their relationship to you, mailing address, email, phone number, date of birth and their social security number.
Life insurance beneficiary rules after divorce
Getting a divorce is a major life change that not only affects relationships, but can also affect the financial realities of all involved. The changes and policy consequences depend on the type of life insurance you have. Term life policies are only in effect for a certain amount of time (i.e., a term) and don’t come with cash value, so they’re not treated as a marital asset during divorce proceedings.
Permanent life insurance policies, however, such as whole or universal, do come with cash value components and can be considered a marital asset. This means it can be split 50/50 or equitably depending on the situation. So a permanent policy could be cashed out and split between yourself and your spouse during the divorce proceedings.
Can you keep life insurance on an ex-spouse?
If you’ve taken out a spouse life insurance policy, but are now going through a divorce, you can keep that policy going if both you and your soon-to-be ex mutually agree. You can add whomever you want as a beneficiary (except minors) or even take out a policy on another person as long as they agree.
Court-ordered life insurance for divorce
If you have your soon-to-be-ex have children together, and you have more financial resources, a judge may require you to keep them as your beneficiary to ensure that your children will continue to be financially protected. This isn’t true for all cases, however. Some states have laws that remove an ex-spouse’s beneficiary designation once the divorce is finalized.
Life insurance that’s there for you through a divorce
Having a policy that can grow with your needs is important. Flexible term life policies can meet the challenge of keeping you covered while going through a major life event like a divorce.
Wysh has flexible, term life coverage options that not only keep pace with where you’re at in life, but our Wysh Granters (aka our kickass customer service team) can guide you and your beneficiaries through every step of the process. They help streamline the claims process, can work with lenders to take care of your debts and see that your Wyshes are granted.