Divorce And Life Insurance

The following answers regarding divorce and life insurance policies can help you identify and understand some of 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 majority. Life insurance policies can also be maintained for longer periods of time if the parent so chooses. If life insurance 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 the life insurance 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 a provision in your divorce agreement stating if the beneficiary designation is changed or if the policy is allowed to lapse, you or your children would be entitled to portion of your ex-husband's estate equal in value to the death benefit.

The following questions and answers highlight some of the other issues that come up concerning divorce and life insurance policies.

Can my husband be required to maintain life insurance for my son?

Tess' Question: My husband says he wants a divorce, and I discovered that he wrote the life insurance agency requesting a change of beneficiary. He has been insured since we got married and I am the primary beneficiary. We have a 12 year old son who is not listed as a beneficiary. What can I do to protect my interest for the life insurance for my son's benefit in case something happens to my estrange husband.

Brette's Answer: As part of the child support aspect of your case, the court can order your husband to provide life insurance in a certain amount with your son as beneficiary. It is also possible sometimes for a person to have to buy life insurance naming the ex-spouse as beneficiary as part of the alimony or spousal support part of the case.

Can he drop me as beneficiary if we are separated?

Lori Asks: We are separated and have not filed for divorce. He was renewing the annual insurance thru his company and removed me as his beneficiary. Is he allowed to change the policy?

Brette's Answer: Yes, it is up to him. You can ask for him to reinstate you as part of your divorce settlement and when it is court ordered he must comply.

What if he changed the beneficiary while we were separated?

Julia's Question: I was married 21 years before I filed for divorce. We were separated (not legally) for not even 3 months when my husband died. I found out later he changed his life insurance over to his 82 year old mother. We paid the premiums every month out of our joint account, so I asked my insurance agent when he changed it. He said he can't tell me because of confidentially. I have 3 kids to provide for. How can this happen?

Brette's Answer: He was the owner of the policy and could name the beneficiary. Unless you had a court order directing him to maintain insurance naming you or your children, it was his choice. Consult with your attorney about the situation.

Is it fraud if he changed beneficiaries because I was filing for divorce?

Kay's Question: I initiated divorce papers and my husband was aware of this. He changed the beneficiary on his life insurance policy to somebody else 1 day prior to being served with divorce papers - however it was not recorded/received by insurance company until 2 days after he was served. He later died. Does changing the beneficiary knowing the divorce was initiated constitute fraud? And which date is legal?

Brette's Answer: If there was no order directing him to name you or your children (if you have any) as beneficiary, it does not sound like fraud. Your attorney can help you understand what your state laws are.

Can I request that he keep me as beneficiary on his life insurance?

Barb's Question: After 38 years of marriage, we are now going through a divorce. He doesn't want to agree to keep paying the life insurance. He's 61 and the alimony payments would end if he dies. Do I have any legal rights to request that he has to keep the policy intact and name me as the beneficiary?

Brette's Answer: This is definitely something you should push hard for. I am sure there are legal precedents in your jurisdiction for this given the length of your marriage. It's a common thing.

Can my divorce be modified to include a life insurance provision?

Mary' Question: I have been divorced for 5 years now and was just informed that a non-custodial parent can be asked to carry a life insurance policy for his children. Can I ask the court to include a life insurance clause now?

Brette Answers: If your decree doesn't order this, you would have to go back and ask for a modification and show some reason why things have changed to make this necessary.

Do I have to pay the premiums on his insurance policy?

Ann's Question: Our divorce decree states that "the husband will carry life insurance on his life in the minimum amount of xx with me as beneficiary. But he says it doesn't stipulate that he's required to pay for it and that since I am benefiting from his death (his words), I should be paying this premium. What do you say?

Brette's Answer: He's wrong. It is standard practice for a court to order a person paying alimony to maintain life insurance naming the alimony recipient as beneficiary. It's essentially another form of alimony.

Are insurance payments considered taxable income for the beneficiary?

Annie's Question: My husband pays for universal life insurance every year in the amount of $4300 and I am the beneficiary. Is that considered taxable income to me?

Brette's Answer: No, unless it is specifically designated as alimony.

He hasn't complied with the court order regarding life insurance.

Angela Asks: My divorce decree states that I can carry a life insurance policy on my former spouse. How do I get him to comply with signing a policy to make it effective? Can I obtain a life insurance policy on my former spouse based on the divorce decree without his signature?

Brette's Answer: Usually the decree requires him to actually pay for the policy, so he has to apply for it. If he doesn't, you file papers with the court for violation/enforcement.

What options do I have if he dropped the policy and is now ill?

Rochelle's Question: My divorce settlement included a $150,000 life insurance policy for our 3 children, with me as beneficiary and a $50,000 policy in my name to be carried by my ex-husband. When he lost his job, he dropped the policies. Now he has a terminal illness and cannot get insurance. What options do I have now?

Brette's Answer: Not much unless he has other assets. You can seek to enforce the judgment and could get other assets instead.

How will it affect the life insurance policy if he has another baby?

Kimberly's Question: It's only been six months since our divorce and my ex-husband's girlfriend is already pregnant. He is supposed to maintain life insurance until our children leave home. How would the life insurance be handled if he were to die over the next 12 years?

Brette's Answer: Life insurance is determined by the policy. Whoever the insured names as the beneficiary is who gets it. If the divorce decree stipulated he was to maintain life insurance with your children as beneficiaries, he is still required to do so even if he has other children. Those other children would not be entitled to the proceeds of any policy naming your children as beneficiaries.

Is a child entitled to the life insurance proceeds if a parent dies?

Cassandra's Question: My child's father remarried, but is now separated from his current wife. Would my child be entitled to any of the life insurance or value of the home if his father dies?

Brette's Answer: Life insurance passes outside the estate. The person named in the policy is who receives it. All other assets pass via the will if there is one, or by state intestacy laws (in which case your son would likely receive an inheritance if there are assets). The home, depending on how it was owned may not be part of the estate. Good luck.

Does he have a claim to the policy if they divorced 7 years ago?

Leigh's Question: My sister in law passed away. She did not leave a will. Her beneficiary on her policy is her husband whom she divorced over 7 years ago. Does he still have a legal claim to the policy?

Brette's Answer: Generally no. Once a couple is divorced there is no insurable interest. There are exceptions so you need to discuss this with an attorney.

Do we have any rights if our mom passed away before our dad died?

Laura's Question: Our parents were married for 23 years and divorced approximately 30 years ago. In the divorce decree my mother is named as having rights to 5 separate life insurance policies. My father remarried and stayed married to his second wife with whom he didn't have any children, until his death eight years ago. (My mother passed away six years before our Dad and never remarried). My siblings and I weren't mentioned in the will and my step mom never shared any details of my father's death, any verbal wishes on his part or any details of his will with us. Do we, as their children, have any rights to a portion of his life insurance policies given our mother passed away before our father died?

Brette's Answer: No, it doesn't sound like it. Your mother was only entitled to the payments if she outlived him, which she didn't. So they wouldn't be part of her estate. This sounds like a painful and difficult situation. I hope maybe you can someday talk with your stepmother and get some information about your father's later years.

Do I have a right to some of my step-dad's life insurance policy?

Amber's Question: When my mother's husband died, they were separated. She was looking into a divorce and had talked to an attorney however she did not follow through. Do I have a right to some of his life insurance? There was no will.

Brette's Answer: If they were not divorced, his estate will be divided according to state intestacy laws, which in most cases means it goes to the spouse and legal children. If he did not adopt you, you are not considered his child. Life insurance is distributed separately according to the terms of the policy. If your mother is listed, she will receive it. Good luck.

If I was named as the beneficiary, can it be challenged when he dies?

Tina's Question: My ex-spouse has died and he left me as beneficiary of his life insurance policy. If I have an adult daughter, can she challenge my receipt of this policy? In other words, can she claim her right to it, versus the ex-spouse?

Brette's Answer: Life insurance goes to the named beneficiary. It has nothing to do with estate law. Whoever he picks gets it. (Note: this only applies if the divorce decree spelled out the beneficiary status or if you were re-designated the beneficiary after the divorce)

Why is the insurance refusing to pay if I am the beneficiary?

Mary Asks: We had a friendly divorce for personal reasons. We had no property settlement as we kept everything in both our names and each remained as beneficiary on life insurance policies. We also continued to live together. He recently died and the insurance company is saying I'm not entitled to his life insurance policy. Help!!!

Brette's Answer: If you're not legally married (because of the divorce) you don't have an insurable interest. You should talk to an attorney to find out if there is a way to prove you have an insurable interest another way (possibly your shared assets). Good luck.

Why is a divorce decree required to change the beneficiary?

Jill's Question: I've been divorced 8 years. The company I work for won't allow me to change the beneficiary without papers saying I'm divorced. We never went to court because we both agreed to the divorce and I have no papers proving I'm divorced. Why do I need to prove this? I thought I could change my beneficiaries whenever I wanted to.

Brette's Answer: This is governed by your subscriber agreement. If you aren't legally divorced you have not had a qualifying event allowing you to make a change.

Is the life insurance beneficiary controlled by the will?

Dale's Question: My mom divorced my dad in 2002. She excluded him as beneficiary in her will, but he still received over $220,000. She had the policy and paid the premiums. Shouldn't the beneficiary be her own adult child that named as beneficiary in her will which included all assets?

Brette's Answer: Life insurance is not distributed via a will, but can only be changed by directly changing the beneficiary on the life insurance plan itself. If she did that, you need to find a copy of the change form she submitted or the confirmation of the change.

Are life insurance payouts divisible in divorce?

Kristina's Question: Last year my husband's mother passed away, and we have just recently decided to get a divorce. I understand that I don't have rights to any of his inheritance (her 401K and the house), but do I have rights to a portion of the money paid out for her life insurance?

Brette's Answer: No, not unless you were named as a beneficiary.

Can he remove me as the beneficiary after 23 years of marriage?

Lynn's Question: I filed a prose packet for a divorce and mailed them to my husband who now lives in another state. Upon receiving the papers he called and said he was going to remove me from his life insurance policy from the union he retired from after 23 years of marriage. I think I should be the beneficiary of the life insurance. How can I make this happen?

Brette's Answer: You have no insurable interest after you are divorced, unless alimony is being paid. You should speak with an attorney about this.

Am I still a beneficiary if life insurance wasn't addressed in the divorce?

Sue's Question: My husband signed ownership of a term life insurance policy over to me and we divorced a year later. Do I still have rights of ownership and beneficiary since this was NOT specifically noted on the divorce decree?

Brette: The problem is that in the eyes of the insurance company you may not have an insurable interest, unless there is alimony or child support that the life insurance is meant to back up.

Can he change the beneficiary if the divorce decree states otherwise?

Cathy's Question: In my divorce settlement, it stipulates that I am to remain the beneficiary on my ex-husbands life insurance policy. My ex-husband is a life insurance agent and I recently found out that he changed the policy and took me off as the beneficiary. Is he allowed to do that and get by with it? In your experience, how negatively would a Judge view his actions being that he is the agent that wrote the policy?

Brette's Answer: You will need to either have your attorney contact his attorney, or go back to court since he is violating the order. It doesn't matter if he is the agent or not - he violated the order. A judge might be more annoyed with someone who works in the industry.

My ex died and never changed the beneficiary like the decree ordered.

Phyllis' Question: I got divorced over 20 years ago. The divorce decree states that our child is entitled to his father's life insurance. My ex just died last month and he did NOT name our son as the beneficiary to his life insurance. How does my son get what the divorce papers say he is entitled to. It was a $40,000 policy 20 years ago. It's worth more now.

Brette's Answer: A claim has to be made against his estate. 

Why can't I stay a beneficiary on his work-provided insurance?

Patrice's Question: My ex-spouse has a life insurance policy through his employer of which I am the beneficiary. He has been told that I cannot remain the beneficiary once our divorce is final because I'm not entitled to his employment related policy (which is elective, and he pays into it monthly). Is this a true statement? He pays me alimony and I am a full time student.

Brette's Answer: Even if that is true (it may be a particular term of this policy), he can still take out another with you as beneficiary. It is very common to do this as part of the alimony plan.

Can I change the beneficiary if insurance wasn't part of the divorce?

Sherry's Question: I recently got divorced, and my husband has a $750,000.00 life insurance policy on me. Is there some way to have this dropped? I heard that he can be made change the beneficiary. He also had one on himself naming me as the beneficiary. I don't think it's fair that he will benefit from my death! What advise could you give me?

Brette's Answer: You are the owner of the policy on your own life and you can change the beneficiary. Just call the company and ask for a beneficiary change form. He is the owner of the policy on his life and controls the beneficiary of that policy.

Can my ex take out an insurance policy on our son?

Danielle's Question: I have been divorced from my ex-husband for 16 years and I just found out he recently purchased a life insurance policy on our 17 year old son. My ex now lives in Mexico, neither my son nor I have had any contact with him since our divorce, and I find this HIGHLY unusual. Can he legally do this?

Brette's Answer: A parent has an insurable interest in a child who is a minor. It is weird if he has had no contact for 16 years.

Who is liable if the insurance policy was borrowed against?

Question: My father was ordered during the divorce to maintain a $200,000 life insurance policy naming my mother as the sole beneficiary. My father recently died and it was discovered that the policy was borrowed on and the premiums went unpaid. Does the new wife have any liability?

Brette's Answer: The estate would be liable.

Is the life insurance obligation dischargeable if he declares bankruptcy?

Judy's Question: We were divorced 13 years ago and the final divorce specified he must maintain life insurance for me (should he pre-decease me) for his total alimony obligations -- which is listed as until I die; or remarry). He declared Chapter 7 bankruptcy over a year ago. Through my extensive research I discovered that alimony payments are NOT dischargeable. My critical question: Is the life insurance obligation NOT dischargeable as well? If you can really help me, I want to thank you SOOO much in advance!

Brette Answers: It's advisable to consult with an attorney, but if the life insurance is designated as alimony then it is not dischargeable. You need someone to review the language against the bankruptcy regulations.

Is his estate responsible for my insurance policy if it was ordered in the decree?

MJ's Question: When I divorced, part of the legal agreement was that he would pay for a small life insurance policy for me, benefitting our children, for the rest of my life. He passed away a few years ago and his widow continued to pay the policy, which is in the name of the Estate. She now says she can't/won't make the policy payments anymore. Can she deny the estate payment of the policy? I'd just like a guideline answer if possible.

Brette's Answer: Financial obligations such as child support or life insurance policies end with death. Your ex's estate is not responsible to continue payments.

Brette Sember - Legal Expert