There are many financial issues to consider when you are divorcing. A well-crafted divorce settlement agreement can protect you and your family from often unforeseen circumstances that develop well after your divorce is finalized.
Important Changes to Life Insurance Following Divorce
As part of a divorce settlement agreement, you or your soon-to-be ex-spouse may be required to buy life insurance naming an ex-husband or wife as a beneficiary. Life insurance payouts will protect recipients of alimony or child support in the event a former spouse dies. Affordable term life insurance can be purchased in increments of 5, 10 or more years depending on the amount needed and will expire at the end of the term.
You may already have life insurance naming your spouse as a beneficiary in place, which can be part of a settlement agreement to cover support obligations mentioned above. However, if there are no financial obligations such as child support or alimony to cover, removing a spouse as a beneficiary to an existing life insurance policy is advisable.