Life Insurance and Divorce

Ty Stewart - Founder - Written by Ty Stewart - Last Updated October 18, 2018

Getting divorced can be a very stressful and messy situation.

Nothing creates an environment of animosity more than trying to fairly divide up shared financial assets.

When going through divorce proceedings, couples often forget that life insurance policies, in particular, whole life policies are significant financial assets that must be considered.

There are many variables involved with life insurance and divorce, making it a complex issue.

LightbulbIf you are still on somewhat amicable terms with your soon to be ex-spouse, your best option is to negotiate any changes in policy ownership or beneficiaries prior to divorce proceedings.

However, if you know reasonable negotiating won’t be an option, there’s a good chance you’ll have to seek legal counsel for resolution.

Whole Life Policies…Your Biggest Financial Asset

You must keep in mind that whole or permanent life insurance policies carry cash value that accumulates over time.

This cash value affords you many benefits, such as borrowing money against your policy to use for a down-payment on a home, or pay for your child’s college tuition.

For many families, a whole life insurance policy may be their largest financial asset, greatly outweighing personal savings.

That’s why it’s so important to make necessary changes to you or your current spouse’s policy prior to completion of divorce to ensure ongoing financial security.

This is especially important if you have children who you want to remain beneficiaries.

Distinguishing Between Separate or Community Property

If a life insurance policy is purchased by an individual before marriage, and paid for by that individual’s separate funds, it remains separate property.

This means it would likely remain in possession of the original policy owner.

warningIf a policy is purchased during the marriage and paid for by a combination of separate and marital funds, this definitely complicates matters.

If this applies to your situation, it would be wise to seek out the expertise of a financial advisor and/or attorney.

Do You Need to Change Beneficiaries?

This is one of the most important things to consider in regard to your life insurance and divorce.

If you own the life insurance policy, you probably have your spouse listed as the beneficiary for the death benefit payout.

If you have children, you may want to change your policy naming them as the beneficiaries on your policy.

Dividing the Cash Value

Like we already mentioned, whole life insurance policies are incredible financial assets. If your policy has been a shared marital asset, you are just as entitled to your fair share as your spouse.

And if you have children, you understand that making sure they are provided for is priority #1. The cash value from a permanent life insurance policy can go a long way in keeping your children financially secure.

When filling out the necessary paperwork for your divorce proceedings claiming your personal and financial assets, always make sure to list your current life insurance policy.

This is something your lawyer and financial advisor need to be aware of from the beginning, so they can advise you accurately on how to proceed with the division of cash value.

Don’t Rely Just on Alimony

You might wind up receiving alimony or child support payments as part of your divorce settlement.

warningWhile this can serve as a significant source of income for yourself or your children, you should not rely on these payments as the only source of income.

What if your ex-spouse passes away? All of a sudden, the alimony or child support payments stop coming in.

One option to think about is taking out a life insurance policy on your ex-spouse.

If you decide on this option, you’ll want to select a coverage amount that will be equivalent to the amount of additional alimony or child support payments you would expect to receive.

Navigating life insurance and divorce doesn’t have to be a nightmare.

Looking to purchase a new policy? Click here to start getting free quotes to compare in just minutes.

Strive to Retain Policy Ownership

Whether you decide to buy a new life insurance policy or use an existing policy from your marriage, it is in your best interest to be the designated owner on the policy.

The reason is simple:  the policy owner has the power to change beneficiaries. If your ex-spouse is the policy owner, he/she could decide to remove you as the beneficiary upon divorce.

LightbulbTo avoid this vulnerable situation, you should purchase a new policy where you are the owner or look into getting ownership of your existing policy transferred to you.

As you might expect, transferring policy ownership from your spouse to you may not always be feasible. Consulting with your attorney or financial advisor is definitely warranted here.

If Shopping for a New Policy, Explore Your Options

No one looks forward to going through a divorce, especially if things turn ugly at any point.

But just because you’re separating from your spouse and dividing property and assets does not mean you have to put yourself in a vulnerable financial situation. Depending on your unique situation, purchasing a new life insurance policy may be your ideal option for ensuring financial security for yourself or your children.

At Simple Life Insure, we aim to simplify the process of purchasing life insurance.

By using our powerful quoting engine, you’ll be presented with plenty of quotes side by side to compare coverage options. This will enable you to select the policy type and coverage amount that fits your needs perfectly.

Divorce is stressful enough on its own. Let us give you some peace of mind by helping you choose a life insurance policy that is right for you.

Always remember that premiums can vary widely between companies.

That’s why it’s SO important that you understand how the different carriers might view your personal situation. Shopping around will result in you getting the best life insurance coverage for your needs at an affordable premium.

Please keep in mind that underwriting guidelines can and DO vary greatly between carriers and this is often a challenge for consumers to navigate.

The secret to getting the lowest rate is placing you in a policy with the company who views you in the most favorable light.

If you are ready to get started, please fill out a quote request or always feel free to contact us with any questions.

Seek Professional Counsel When Needed

Life insurance and divorce together can make for some murky and turbulent waters.

Chances are you’ll have questions along the way, and want to make sure you’re doing the right thing.

Never hesitate to reach out to an experienced attorney, financial advisor, or life insurance agent to get your questions answered.

One bright spot in an otherwise gloomy situation is that plenty of help is available. You just need to be willing to reach out and take advantage of it.


About Ty Stewart
Avatar for Ty Stewart
Ty Stewart is the founder of He is an independent life insurance agent that works for his clients nationwide to secure affordable coverage while making the process simple. There is never any cost to use his services.

Posted in Family