Did you know that September is Life Insurance Awareness Month? Insurance is among the long list of items to sort out when considering divorce. In order to protect your children and your financial interests, it’s important to consider:
- Changing beneficiaries
- Accounting for alimony or child support
- The cash value of the policy
- Ensuring children are financially protected.
At the time a couple files for divorce in Arizona the court will issue a preliminary injunction, which prevents a spouse from removing another spouse from any type of insurance coverage until a divorce is finalized or the parties come to a written agreement. Like most issues, this can be discussed and sometimes agreed upon outside of court. However, it’s always a good idea to have a trusted attorney look over the agreement before it is signed and give you proper legal advice regarding your insurance issues.
Most married couples list their spouse as the beneficiary of their insurance policies. However, once you are divorced, you will likely want to revisit this. Most insurance policies allow you to easily change the beneficiary of your policy by making a phone call and signing a change of beneficiary form. You may consider changing the beneficiary to your children or to a trusted family member, as conservator over the children’s funds.
Account for child support or alimony
During and after a divorce, one parent is usually obligated under the law to pay child support to the other parent to help care for the children. The death of that parent who pays child support can cause serious financial struggles in the future for the surviving parent. It may be a good idea to remain the beneficiary of a life insurance policy that covers the life of your ex-spouse in order to prepare for the worst-case scenario. An attorney can help you secure future child support through an order requiring the other parent to maintain a life insurance policy. It is important that the parent who pays child support obtains a policy with sufficient life insurance coverage to provide financial benefits until your children turn 18 and have graduated from high school. It may be necessary in some cases for the parents who receive the child support to own the policy themselves. This same life insurance issue applies if no children are involved but a spouse depends on their ex for alimony support (now known as spousal maintenance.) Make a plan to cover yourself in the worst-case scenario.
Cash value of the policy
Cash value life insurance policies are considered personal property. They are also considered community property if the cash value was earned during the marriage. These policies should be included in the list of assets in a divorce. A judge will decide how that policy and the cash value is distributed.
Ensure children are protected
Becoming a single parent may necessitate purchasing a new life insurance policy for yourself. If you were to die, how would your children afford to live? Work out a plan with your ex-spouse for who will care for your children, and then think about the financial aspect. Find a policy that will cover your annual income each year until your child turns at least 18.
In addition to life insurance you also need to consider health insurance. If you are on your spouse’s insurance policy, can you remain on it after divorce? Are you able to afford the monthly premium without your spouse? This can, and should, be worked out in a divorce settlement. Count on an experienced attorney like Regina Pangerl to offer advice when dealing with this complicated issue.
Pangerl Law Firm P.L.L.C. focuses on divorce, child custody, mother’s and father’s rights, child support, and all other areas of family law, as well as personal injury claims. Our office is located in Deer Valley and serves the greater Phoenix area, including the communities of Scottsdale, Peoria, Glendale, Cave Creek, Avondale, Goodyear, Surprise, Mesa, Tempe, Anthem, New River, North Phoenix and Phoenix. For more information, call: 602-942-6200.