Even if you don’t have insurance now, it may be something you should consider getting ordered as part of your divorce, especially if you have children. If one spouse will be paying support, a life insurance policy could guarantee that the support continues even if that spouse were to die. That could allow continuity of lifestyle for your children at a difficult time.
Many couples already have life insurance, generally to continue a deceased spouse’s income in case the worst happens. If you do have life insurance, divorce is a good time to review your policies and make sure they will still meet your needs after the divorce.
If you have an existing policy, does it have cash value? Some types of life insurance have an investment component, meaning that they build value over time and that value can be cashed out under certain circumstances.
Other couples have never really thought about life insurance. Now is the time to begin thinking about it. What would you do if your child and spousal support suddenly stopped? Could you recover, financially, relatively easily – or would it create hardship for you? Could you continue to pay your mortgage? What other obligations do you have that rely on your spouse’s income?
Questions to ask about requiring life insurance in a divorce decree
The first thing to do is budget. How much will any child and spousal support add up to? How much insurance will you need to replace that level of income? Can you afford that much coverage? If not, how much insurance can you realistically afford?
Should you buy universal life or variable life insurance with an investment component? Who will own the investment component and the right to cash out the policy?
Will your need for coverage change over time? For example, you could decide you only need the policy until your youngest child turns 18.
Who should pay for the insurance? Should it be the insured or the beneficiary?
How will proof of the insurance obligation be provided? Will the buying spouse have to provide proof of insurance each year?
What should the penalty be for failing to buy or renew the insurance?
What types of decisions do you have to make regarding the investment strategy or growth in value? What should be done if better investments are available?
Ultimately, you need to find affordable coverage that meets your goals. Then, you must decide who will be obligated to buy and pay for the policy.
If having life insurance seems like a good idea to you, discuss your interest with your divorce attorney.