When a Pittsburgh couple divorces, there are numerous factors that go into the process. Assets and property have to be divided, child custody and support agreements may have to be made, as well as issues of spousal support. However, there are many smaller, but impactful, factors that must also be decided that could fall by the wayside in a divorce settlement.
Life insurance is one of these issues that can often be overlooked or inadequately addressed during the negotiation process. While it can be a huge benefit in the event its needed, it is such a rarely used item that it may not be the first thing many couples think of when they divorce. It is also something that comes with the potential for mistakes that are easy to avoid, but can have hard consequences should they be overlooked.
In a divorce, it is common that the former spouse that is responsible for alimony and/or child support is also required to purchase and maintain term life insurance for the financial protection of their former spouse and their children. In the mess that can come with divorce, the most common mistakes that come with life insurance are underinsurance, a policy that has lapsed due to failed payments, and attempting to change the beneficiary to a new spouse. Continuing to pay premiums, ensuring the policy actually covers all individuals it needs to, and keeping a former spouse and children listed as beneficiaries can prevent these issues.
Term life insurance not only benefits the former spouse, but also protects any children shared between the divorcing couple. Should something happen to one parent, these policies can help pay off mortgages, put kids through school, and cover old debts. It can be difficult to understand how to handle items such as this during the stress of a divorce settlement, and some Pittsburgh couples find peace of mind in obtaining the assistance of professionals who are aware of all factors that go into dissolving a marriage.
Source: Live Insurance News, “Life insurance and divorce – what to do with a term policy?,” Chris Taylor, July 23, 2012