YOU ASK:

Does a divorce decree nullify the life insurance policy?

WE ANSWER:

The life insurance will still remain in force even with a divorce. The question just is, whether the named beneficiaries remain the same. This may also vary from state to state, since divorce laws are different by state.

Ex-Spouses as Beneficiaries

The usual situation will be that you named your spouse as your beneficiary. However, what happens in the event that you divorce?

  • In some states, there is an automatic invalidation of your ex-spouse's designation as your life insurance beneficiary. What happens is that the life insurance proceeds will be designated towards your contingent beneficiary. This is the beneficiary that you select in your life insurance application. (To put it simply, the contingent beneficiary is kind of a "spare tire" in the event that one of your tires go bust.)
  • In some states, the ex-spouse remains as your beneficiary until you ask that he be replaced.

Now, if the life insurance is part of the divorce settlement, the judge can order that your ex spouse remain as your beneficiary and you are required to comply with this divorce decree.

What is best is that both parties go for a win-win situation. Where, in your divorce agreement, each of the ex-spouses (but more on the spouse paying alimony) should have enough insurance to pay for each one's share of the family's expenses - such as a mortgage or the children's education. To ensure that your spouse continually pays for his insurance coverage, you can require proof of such payments in your divorce agreement.

Consult with your life insurance agent first, so that you know the implications, as well as how you can fully protect yourself.

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