Who Takes Ownership of a Life Insurance Policy in a Divorce?

Who should be the owner of life insurance policies related to a divorce settlement?

To answer that question, first consider the purpose of the life insurance policies. Often, life insurance is used to protect the income of a spouse providing alimony and/or child support. The policy would insure the life of the spouse providing child support, and the beneficiary would be the spouse receiving the support. This way, if the providing spouse were to die, the life insurance proceeds can be used to replace the lost income.

The question of ownership is an important one, because the owner can change the beneficiary at any time. If the policy has cash value, the owner has control of this as well. Consider that divorced spouses often remarry and have additional children. Non-custodial parents often lose contact and concern for their former spouse, and perhaps even their common children.

Most divorce courts will require the providing spouse to maintain a life insurance policy that will cover the support payments for however long the payments are supposed to be made. However, enforcing this may become problematical as time goes on, especially given that there is no automatic way of being notified that payments are being made, or that no changes have been made to the beneficiary.

If you are concerned about enforcing life insurance protection as part of a divorce settlement, ask your attorney if the policy ownership can be entrusted to you. Even if this means paying the premiums yourself, the premiums can always be figured into the support payments.



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CHANGE OF BENEFICIARY -- One of the important chores after a divorce is final is also one that is most often forgotten: changing the name of the beneficiary on any financial instrument that has one, including insurance.

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