Life Insurance

In divorces that include alimony or child support obligations, life insurance is often used to protect the recipient in case of the payor’s untimely death.  Life insurance companies have drastically different rates depending on a client’s height, weight, health history, family history, medications, etc.  By doing some preliminary underwriting, we can help match the client to the appropriate insurance company, and ultimately help save time, aggravation, and money.

With regards to divorce cases, here are some common insurance-related mistakes:

  1. Not having insurance “in-force” prior to finalizing agreements. Life insurance related to a divorce case should be in force before the final agreement is signed. This will protect the receiving party in case the payor is found to be uninsurable.  In addition, life insurance payments can be tax deductible to the payor if it properly structured within the divorce agreement.
  2. Relying entirely on Employer based life insurance – Many people have employer based life insurance that is often a multiple of their salary. While these policies are offered with minimal or no underwriting and have very attractive rates for younger employees, they are dependent upon a person’s employment at that company. If a person switches jobs, or get laid off, this coverage may be lost or become unaffordable.
  3. Improper ownership of insurance policies. In order to ensure that the life insurance does what it’s supposed to, and stays in force, it is best to have the insurance owned by the receiving party. (husband owns wife’s policy and wife owns husband’s policy). This serves to ensure that beneficiaries cannot be changed to disinherit the former spouse, or that policy lapses due to lack of payment.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.Securities offered through Securities America, Inc. Member FINRA/SIPC. Advisory services offered through Provo Wealth Management Group. Securities America is not affiliated with any other named entity.  This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed. Securities American and its representatives do not provide legal advice; therefore it is important to coordinate with your legal advisor regarding your specific situation. 


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