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Life Insurance in Divorce: What Every Couple Should Know

life insurance and divorce
  • Term life insurance is one of the cheaper forms of life insurance.
  • Most group life insurance policies usually are term life insurance.
  • Divorce settlements usually stipulate life insurance coverage when there is a child and/or spouse obligations.
  • Whole life insurance may have higher premiums and applies throughout the lifetime of the policyholder.
When all is well and good during a marriage, spouses usually take on life insurance policies to protect their loved ones in case something terrible happens. Along the line, a divorce might be the reality, and it is possible to forget about the life insurance policy in the chaos of the divorce process.  This is a mistake, as a life insurance policy is very important during the divorce settlement process. If you have questions about what happens to a life insurance policy during a divorce or separation, read on.

Types of Life Insurance

How you’ll handle life insurance during a divorce or separation depends to a large extent on the type of life insurance in question.  Here are the common types of life insurance policies you would have to deal with in Canada:
Court ordered life insurance divorce, what does it mean?Ken Maynard ADFA, Acc.FM

Court-ordered life insurance in a divorce means the court mandates one party to maintain a life insurance policy, usually to secure financial obligations. Before taking action, consult a divorce mediator or financial analyst.

How could divorce affect life insurance?Ken Maynard ADFA, Acc.FM

Divorce can impact life insurance in terms of beneficiaries, policy ownership, and premium payments. Before making any changes, consult a divorce mediator or a certified divorce financial analyst.

What happens to joint life insurance after divorce?Ken Maynard ADFA, Acc.FM

After divorce, joint life insurance policies might need adjustments in terms of beneficiaries and ownership. Consult a divorce mediator or a certified divorce financial analyst for guidance.

Can you get life insurance on an ex-spouse?Ken Maynard ADFA, Acc.FM

Yes, you can get life insurance on an ex-spouse, especially if there are financial obligations like child support. Always consult a divorce mediator or financial analyst before taking out such policies.

Can my husband remove me from his life insurance?Ken Maynard ADFA, Acc.FM

Yes, a policyholder can change beneficiaries, but there might be legal implications during divorce proceedings. Before making any decisions, consult a divorce mediator or a certified divorce financial analyst.

How could divorce affect life insurance?Ken Maynard ADFA, Acc.FM

Divorce can impact life insurance in terms of beneficiaries, policy ownership, and premium payments. Before making any changes, consult a divorce mediator or a certified divorce financial analyst.

Is life insurance still valid after divorce?Ken Maynard ADFA, Acc.FM

Yes, life insurance remains valid after divorce. However, beneficiaries and other terms might need to be reviewed. Always consult a divorce mediator or financial analyst before making changes.

Is a life insurance policy a marital asset?Ken Maynard ADFA, Acc.FM

Yes, a life insurance policy can be considered a marital asset. Before making any decisions, it’s essential to seek guidance from a divorce mediator or a certified divorce financial analyst

Can you keep life insurance after divorce?Ken Maynard ADFA, Acc.FM

Yes, you can retain your life insurance after divorce. However, it’s essential to review the policy terms and beneficiaries. Before making decisions, consult a divorce mediator or a certified divorce financial analyst.

Is life Insurance an Asset in Divorce

During a divorce, the assets of the couple are usually split evenly. However, this doesn’t apply to life insurance coverage. If there are children in the marriage, the court could order one of the spouses to pay alimony or child support.  As a result of this, the divorce settlement usually stipulates that there is life insurance coverage with the child or the receiving spouse as the beneficiary. This is in order to ensure that if the spouse paying alimony dies, there are still available funds to cover the divorce obligations.  If there is an existing life insurance policy before the divorce, it would have to be maintained after the divorce. If the supporting spouse doesn’t have life insurance coverage at the time of the divorce, he would need to get one in order to cover the divorce obligations. 

Handling Pre-Divorce Life Insurance

If there is a pre-existing life insurance policy at the time of the divorce, there is a need to take an inventory of it. This is important as it would determine if it is enough to cover the divorce obligations like spousal support and child support.   This inventory is usually done by accounting for existing assets and liabilities in the marriage. The life insurance policy is also among the assets that should be tendered during the inventory process.  How the life insurance policy is handled depends on the type of life insurance policy in question. For instance, in a whole life insurance, you and your ex can either decide to keep the policy, or you can cash it out and use it to settle divorce obligations

Potential Life Insurance Issues

After the divorce settlement, there are some issues that could crop up with the life insurance policy and present some problems. Here are some of them and how to address them:

Final Thoughts

Navigating through the complexities of divorce can be challenging, especially when considering the intricacies of life insurance. Understanding how these policies work is crucial, whether it’s a term life policy or permanent life insurance. In Canada, many individuals wonder how much life insurance they may need, especially when situations change, such as becoming a newly single parent or when a family member takes primary custody of the children.

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About the Author:
Ken Maynard ADFA, Acc.FM

I assist intelligent and successful couples in crafting clear and straightforward separation agreements, ensuring a smooth transition towards a secure future. This is achieved in four meetings or less, sidestepping the excessive conflicts, confusion, and costs often associated with legal proceedings. You have the option to collaborate with me via video conference or in-person with a DTSW associate at any of our six Greater Toronto mediation centers, located in Aurora, Barrie, North York, Vaughan, Mississauga, and Scarborough.

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Ken Maynard ADFA, Acc.FM