Who Takes Ownership of a Life Insurance Policy in a Divorce?
Key Points
  • Typically the owner of an insurance policy is able to change the beneficiary at any time. The owner is the person who pays the premiums.
  • In divorce, if your settlement requires one spouse to maintain a life insurance policy for the loss of income, or in the case of ensuring continued child support, you may just want to be the owner of the policy and you are then paying the premiums. There may be a way to figure in the premiums into the support payments.

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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CHILDREN’S INSURANCE -- Divorcing parents must negotiate health and dental insurance for their minor children as part of their separation agreement. Sometimes the spouses negotiate a qualified medical support order, known as a QMCSO, which can be part of COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage that also protects the former spouse.

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