Fifty percent of marriages today end in divorce according to the U.S. Census Bureau. It doesn’t take a statistic, though, to understand the high levels of stress caused by divorce. If children are involved it’s important to minimize the stress and focus on practical issues such as protecting the future of children after divorce.
Few life experiences affect your financial stability as drastically as divorce. The need to support two residences, the division of assets and possibly sale of the family home change the financial reality of both adults involved. The need for life insurance to protect the future of your children is a crucial step toward re-establishing control over your financial stability in the future.
Lincoln Life Insurance – Before the Divorce is Final
A divorce presents you with many important problems to consider such as child custody, child support and alimony, joint property held and outstanding debts. Adding life insurance to the list presents one more problem to be handled but protecting your children’s future is both responsible and necessary.
Providing for Children and Ex-spouses: If you are not the custodial parent you may be paying alimony as a provision of the divorce agreement. A life insurance policy will provide funds to replace the alimony and child support you pay and may also cover the future expenses of higher education for your children.
Changing the Beneficiary: Your former spouse may have been listed as the beneficiary on your life insurance policy. Unless there is an agreement that you will continue that insurance protection you should consult your insurance agent to discuss changing the beneficiary of your death benefit.
If You are the Beneficiary – Get it in Writing. For the custodial parent, the security of the children may be closely tied to the child support and alimony awarded in the divorce agreement. There may be a court order that prohibits changing the beneficiary on the life insurance policy of the parent who does not have custody. If that is the case, notification of the custodial parent may be required of any changes to the life insurance policy. This would include loans obtained against the cash value of the policy, a lapsed policy due to non-payment of premiums or a change in beneficiary. If included as a condition of the divorce settlement, failure to adhere to the agreement could place the ex-spouse in contempt of course.
If You Are the Policy Holder – Assign a Trustee. You may choose to establish a trust managed by a trustee if you are paying for a life insurance policy to protect your children until they are 18. The trustee may be an attorney, a financial institution or a family member. You may choose to appoint your ex-wife as the trustee and add a stipulation to the divorce settlement documents that prevent her from spending the insurance money or cash value accrued in any way that does not benefit the children directly.
During a Divorce – Which Works Best, Term or Whole Life Insurance?
With the changes in priority resulting from a divorce action, a term life policy may be the best option for Lincoln insurance required by the divorce settlement. You may have purchased whole life insurance when you were first married with a view to building cash value over time.
- Lacking the cash value component, a term life policy carries a lower premium
- If the policy is to provide benefits for your children, term life insurance can be decreased as the child grows older or increased to cover the costs of future education
Other Lincoln Insurance Issues to Consider During Your Divorce
Health Insurance
- Talk to your employer about obtaining health insurance if you were previously covered under your ex-spouse’s benefit plan. If your employer does not offer group health insurance, look for a health insurance policy online
- To cover any gaps in health insurance consider using the COBRA plan.
- Choose the best healthcare coverage for your children by working with your ex-spouse to decide whether their health insurance or yours will provide the best coverage.
- Your children’s health – and your own – should be a priority. If there is no coverage available from the employer of either parent consider the purchase of a catastrophic health policy. Though it will not pay for routine medical expenses, this policy will help with a medical emergency. It’s not an ideal solution but there is a high risk associated with having no medical insurance coverage at all.
Auto Insurance
- Update your auto insurance if it includes both husband and wife on the policy. The sole driver should be listed on the policy.
- Some auto insurance policies require husband and wife to reside at the same residence. If this is the case or if you receive discounts for insuring multiple vehicles you may need to purchase a new auto insurance policy.
Homeowners Insurance
- If a divorce affects ownership of jointly held homes or property, protect your interests (and the property) by updating the insurance on properties to show correct ownership following the divorce.
The friendliest of divorces takes an emotional toll on those involved; the stress of a less-than-friendly divorce can make your life seem out of control. It is important, however, to take steps to protect your assets, your interests and your children by making adjustments to insurance policies to reflect the new reality of your life.
Learn how much you can save today on your life insurance. Get your free Lincoln life insurance quotes today!
