Life insurance is one of those things that people often buy about the time they start a family. Then, they tend to forget about it unless something serious happens.
If you’re heading toward a divorce, however, your life insurance policies need to be evaluated carefully. They may take on a new level of importance in your life. Here’s why:
- You need to stop your spouse from making any changes to the policies until the divorce is final and you’ve had a chance to negotiate. That means asking the judge to issue temporary orders that prevent your spouse from doing so — and you need to act quickly before any damage is done.
- Your policies may have considerable value. Some life insurance policies grow a cash value over time. That can add up to a considerable amount, especially in larger policies. Those funds are likely part of the marital assets.
- You may need to use the policy as a form of collateral toward your support payments. Whether you’re talking about child support or spousal support, the continued payments will be a source of financial stability for the other party for a number of years. You may be required to maintain a life insurance policy that would cover your support if you die prematurely.
- You have to negotiate who pays the premiums (and how). You may want reassurances that your ex-spouse won’t cancel a policy behind your back. If so, you may have to ask the court to let you make the payments and order your ex-spouse to reimburse you.
Working through the intricacies of your divorce and the division of assets can be difficult. An experienced advocate can help.