During a divorce, there are many financial considerations that must be reviewed. Life insurance is one of those considerations that should not be overlooked and there are some general considerations to keep in mind when reviewing life insurance policies that existed during the marriage.

Many people hesitate to contact their life insurance company after a divorce for fear that their rates will increase. While this may be true for some types of insurance, this is not true for life insurance. Divorce will not cause rates for a life insurance policy to increase. Divorce is a time for reassessment of life insurance policies in force because failure to do so could have negative impact upon the needs of the insured.

While a life insurance policy may not need to be rewritten after a divorce, there may be additional needs that need to be addressed. If the wife is awarded custody of the children she may need to obtain life insurance, if she was not previously covered, to protect the financial security of her family. It is common in many families for only the husband to have coverage, particularly if he was the only one to work outside the home during the marriage. This is a common mistake because regardless of marital status, caring for the children in the absence of the mother would create a financial obligation. This is often overlooked by many married couples and newly divorced mothers should particularly investigate life insurance options for the protection of her children.

When two people become divorced, any current life insurance policies in force still remain in effect. Life insurance is unique because while an insurance relationship must exist at the time the policy is written, this insurable interest does not have to continue throughout the life of the policy. Divorce also does not dissolve this insurable interest. For example, a wife can purchase a life insurance policy on her husband while they are married and the policy will remain in effect after they are divorced. The wife will continue to remain the owner of the policy as long as the premiums remain current.

Many people acquire life insurance on themselves, making themselves both the owner and the insured. After a divorce, it may be necessary to make a change in the designated beneficiaries. The beneficiary is the recipient of the benefit in the case of death of the policy’s insured individual. In the case of a policy where the insured is not the policy owner, it may not be possible to make a beneficiary change, regardless of who was making the past premium payments on the policy. The policy owner is the only one who can make changes to the policy’s beneficiaries. In this circumstance, it may be best to obtain quotes for a new policy.

Divorce can be a particularly difficult time with a multitude of financial decisions. Your life insurance agent can help you during this stressful period by reviewing your family policies and helping you choose the right life insurance coverage for your loved ones.