Can Life Insurance Help During (and After) Divorce?

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Life insurance can help provide future financial security after a divorce.

You are divorced.

Maybe this is a recent occurrence.

Perhaps it has been a long-standing reality.

Either way divorce requires strategic planning when it comes to finances.

According to a recent Insurance News Net article titled “5 Ways Life Insurance Eases Post-Divorce Estate Planning,” life insurance can help.

Life insurance provides a safety net in divorce.
Divorce may require the safety net provided with life insurance.

How so?

Divorce-related expenses.

If the divorces is contentious, then it can be a long and arduous process.

With legal battles over child custody or the division of assets, the attorney fees can be quite extensive.

How can you afford these?

If you have an established permanent life insurance policy, you could take loans from the cash value of the policy and use these to pay for the expenses.

This can protect you from having to liquidate assets to cover such fees.

Income protection.

A divorce will likely impact your income.

This is especially true if you were a stay-at-home parent.

Although you may receive alimony after the divorce, you and your children could be unprotected if your ex passes away.

Having an insurance policy on your ex to benefit the children should he or she die will help provide financial security for you and your children.

Estate preservation.

Life insurance funds can be used to pay debts.

This can be done without having to liquidate assets within the estate.

You can ensure a financial legacy for your heirs, even if your ex has been fiscally irresponsible.

Inheritance for children.

If you have children from your previous marriage, it is important to provide for them should you remarry.

A life insurance policy can enable you to provide for both your children and your new spouse.

One can receive the life insurance policy while the other can receive the estate through a trust.

Blended family issues require strategic planning to care for everyone involved.

College funding.

Both parents should have life insurance to ensure the children are set up for success.

If one spouse dies, the children who were depending on parental support for college will not need to relinquish their studies due to financial hardship.

Life insurance now can protect your children later.

What can of life insurance should you have for these goals?

Permanent rather than term life insurance is recommended in these situation.

Although term is less expensive, permanent life insurance provides greater estate planning flexibility and value for divorced and blended families.

These policies can even include riders for long-term care expenses in the future.

Permanent life insurance with strategic estate planning can protect your loved ones even after a divorce.

Reference: Insurance News Net (November 5, 2019) “5 Ways Life Insurance Eases Post-Divorce Estate Planning”