What happens to life insurance after a divorce?
However, unless you review your policy, any pay outs may still be going to your ex – if it’s been years since the split, you might even have a new partner and/or children to consider.
What happens to a joint life insurance after a divorce?
If you have a joint life insurance and you don’t make any changes to that policy, your ex-spouse will benefit depending on who dies first. There could be a few options available to you:
- Separation Clause – Depending on the provider, you may be able to turn the joint life policy into two individual single life policies.
- One person takes over the policy – You and your ex-spouse will need to mutually agree on who takes over the policy and then it will be signed over to that person with a legal document. That person will then have sole responsibility for paying the premiums and can choose their new beneficiary.
- Cancel the policy – If you cancel the joint policy, both parties will then need to sort their own single life policies.
What happens to an individual life insurance policy after a divorce?
If you both have single life insurance policies, this can be a lot easier to sort out. The main thing to check is who the main beneficiary is.
If you set up the policy when you were married, it’s likely that the payout will go to your ex. You will need to decide if you still wish for that to happen. You may like to change it to a new partner, a family member or your children.
To change the beneficiary, you will need to contact your insurer.
Can my ex-spouse collect my life insurance pay out?
If you haven’t stated otherwise, yes they will receive the payout from your life insurance policy.
If you want someone else to benefit, you must inform your insurer and get your beneficiary information updated.
What happens to a mortgage life insurance policy after a divorce?
A mortgage life insurance is a policy that you take out which will pay off your mortgage in full in the event that you die.
During a divorce, this will be something to think about. If you’re selling your house and splitting the proceeds, you may not need the policy anymore.
Alternatively, if one of you is buying the other person out, the original life insurance won’t be relevant anymore. The individual keeping the house might want a new mortgage life insurance policy to cover any further mortgage payments.
However, if you maintain joint ownership after the divorce, you might need to keep the policy in place whilst you’re both still paying the mortgage.
What are the life insurance beneficiary rules after divorce?
Once you’ve divorced, you can change the beneficiary on a single life insurance policy to whoever you like. Some options could be but are not limited to:
- Your new spouse or partner – particularly if you buy a house together or have children
- Your ex-spouse
- Your children – if they’re young, you might want to leave the money in a trust for them to access when they’re older
- Another family member or loved one