It is a well known saying to all – “Marriages are made in heaven.” This is quite true. But not always. While some marriages do not end up in a divorce, but many are not successful. Many couples go for term insurance plans but what about those life insurance policies after divorce?
No one ever thinks of divorce. Life is uncertain and so is the divorce. Sadly, some marriages do not last long.
So what is the option if you are divorced and you hold a term insurance plan? Your spouse is your beneficiary, so what next?
The answer lies in the fact that it all depends on how you want to move ahead with it.
Understanding Life Insurance and Divorce co-relation
It is very commonly seen that the spouse who takes care of the child and has many other responsibilities takes the term life insurance plan forward for financial meets and their ex so that they face no problems. Unfortunately, if the life insurance holder passes away, the benefits automatically pass on to the ex-spouse as he or she is the beneficiary.
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Several circumstances may arise. Like if you do not have a life insurance policy and there is an order from the court to get it, then you will have to purchase one mandatorily. On the other hand, if you have already taken a term life insurance and divorce takes place. In that scenario, you can negotiate with the company and get the ownership transferred.
Another scenario may creep up in which you do not have children and you have taken term insurance plan for paying off various debts like, home loan, car loan, and many others. You can sit back and decide mutually in ending up the term plan because the sole motive no more exists.
There might be another case like you have a child or children and you are a divorcee now. What action is left thereon? It is easily solvable like you can remove the name of the beneficiary who would be your spouse and rename the beneficiary as your children.
Above were some of the commonly known scenarios which can come up and if you do not have proper knowledge, you can end up being in a mess. Take the advice of the experts and move on accordingly. Talking with the advisor and your financial expert will help you make the right decision and they will also try to keep you in the win-win situation.
Having a sound knowledge of the scenario that you are facing will keep you updated and even let you gain some benefits from your life insurance plan? Divorce is never a choice and is also very stressful. Life insurance policies after divorce are more stressful. Take out ways and come with some fruitful plans with your efforts.
What can happen to your life insurance policy after divorce?
Sometimes, life insurance can be troublesome and one of the major situations is divorce. It is an inevitable situation. Several other problems can creep up, like child custody, assets sharing, and more.
The topic becomes even more aggravated when couples who are seeking a divorce have children. Life insurance policies after divorce if taken forward will give a great deal of financial protection to their children and in most cases to either of the spouses.
Cash value is another important term in any life insurance. Let us understand the cash value first.
It is a kind of investment feature, which means if you start any life insurance policy you are planning to invest somewhere. It is a kind of emergency fund. This cash value is easily available as an interest which is a portion of your life insurance policy and you can borrow the cash whenever necessary, particularly emergency.
In the case of life insurance policies after divorce, cash value things need to be decided. Who among the two will be paying the rest of the premiums, is it going to be on sharing basis? Many other questions can come up in the mind. Some of the solutions are possible.
Let us see what steps to further follow:
#1: The life insurance policy can be cashed out seeking an emergency fund and if the court considers it as an asset, it is divided among the two.
#2: The two may not end the policy on mutual discreet and the policy can continue to provide benefits to the children or spouse.
#3: The policy shall continue as per the government’s order for future expenses of the child if any.
#4: A new policy is issued in most of the cases and the older one is replaced with new beneficiary and premiums.
#5: The ownership of the life insurance policy after divorce is carry forwarded from one spouse to the other just to ensure that the premium is always paid after their divorce.
The major concern in all the above is the change in the name of the beneficiary.
Usually, when we purchase any term insurance plan, the life partner is the beneficiary. And we change the name of the beneficiary after a divorce. Because there is no mutual consent on any aspect.
How to change the name of the beneficiary?
This process is feasible by contacting your life insurance company and the customer care. And they will guide you for further processes.
Read Also: 9 Tips On Who Should Be Your Life Insurance Beneficiary?
The beneficiary name is easily changeable by filling the due form and then submitted for the implementation of a new life insurance plan.
Conclusion
It is tough to come out of the stress of divorce. Yet to lead a peaceful life, people move ahead with harsh steps. By following the instructions of the life insurance policies and then proceed further with the buying process. Make clear of such circumstances like divorce and separation or single parent schemes.
Life insurance policies after divorce have certain rules to follow but they have the same benefits as that of others. Forget everything and move forward with a life insurance plan.
