3 Tips for Obtaining Life Insurance Required by a Divorce Decree

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Divorce decrees that involve an ex-spouse to pay alimony or child support will typically require a life insurance policy in most states. 

Whenever someone is financially dependent on another’s earnings, an insurable interest is created and the courts recognize this in divorce decrees.
Here are 3 important tips if you’re looking for life insurance required by your divorce decree:

  1. Divorce Life InsurancePurchase a term life insurance policy.  Budgets are typically tight after a divorce and term life insurance is the least expensive option and will ensure the premiums stay fixed.  Just make sure the term length will cover the specified amount of time of the child support  (if you're a parent) or alimony obligation.
  2. Transfer the owner of the policy to the person receiving the alimony or child support.  We recommend the person receiving the alimony or child support be the owner of the policy (even though the ex-spouse is the one being insured and paying for it) so they don’t have worry about a beneficiary being changed or the policy lapsing. They would be notified as the owner of the policy if there's a lapse; and beneficiary changes can only be processed from the owner.  This won't happen unless it's negotiated into the divorce decree. 
  3. Your employer provided life insurance won’t suffice, purchase an individual life insurance policy.  Depending on your state’s laws, a divorce will automatically remove your ex-spouse as beneficiary.   If you wish to use your employer provided life insurance, it must be stated in the divorce decree (good luck with that!).   This is rarely allowed because leaving your job cancels your employer life insurance and leaves those who depend on the alimony and child support at risk.

The best resource for additional information about obtaining a life insurance policy required by a divorce decree is to speak with an independent life insurance agent who has worked with divorce decree required life insurance and knows the process.

About Jeff Root

is the owner of rootfin.com. He's an independent life insurance agent who has helped 1,000's of consumers purchase life insurance online and over the phone.

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