Going through a divorce can be a very difficult experience on a number of levels. For couples with children, one of the things that is often lost is the sense of security of knowing that the children will be taken care of if something happens to the breadwinning spouse.
This is especially true in cases where the parent without primary child custody is responsible for providing the majority of the children's financial support.
This issue can be addressed by including provisions regarding life and disability insurance in the divorce settlement agreement. If something happens, the proceeds from these insurance policies can stand in for child support payments. A life insurance policy can ensure that there is sufficient money to take care of the children if the breadwinner dies. Similarly, disability insurance will provide coverage in cases where the breadwinner becomes ill or injured and cannot work.
In divorce cases, life and disability insurance policies are intended to benefit the other parent. Therefore, even though it might seem counterintuitive, the parent who is not the subject of the insurance should own the policy, be named as the beneficiary and pay the premiums. It is best to take control of the issue and remove any risk of the policy lapsing.
As part of the divorce, the couple should reach an agreement regarding life and disability insurance and codify it in the divorce agreement. If the benefitting spouse is concerned about being able to afford the premiums, alimony payments can sometimes be adjusted to cover the cost.
Taking out a good life insurance policy is one of the most important things you can do to protect your children after a divorce.
Source: Huffington Post, "Divorce Questions: How Can Divorce Affect My Life Insurance Policy?" Honoree Corder, May 2, 2012.
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