There is much that takes place when a marriage dissolves. Not only is it an emotional period, but all the assets acquired while a couple were together also have to be divided. One important asset that must be taken care of, but might not immediately come to mind, is a life insurance policy. While many couples name their spouses as the beneficiaries of their life insurance policy when they’re together, it’s more than likely they don’t want this to remain the case after the divorce.
Why do so many people fail to make this change and their policy’s death benefit winds up going to their ex-spouse? To put it simply, they forget. This is a detail that gets overlooked with all of the other things that require their attention at such a time. Unless you contact your life insurance provider and notify them of the change, your policy’s beneficiaries will stay as-is, regardless of the split.
Making the change is easy
Changing the beneficiary on your life insurance policy is easy. You simply need to contact the life insurance company, request a change of beneficiary form and fill out the relevant paperwork. It’s a good idea, too, to make sure this change is noted in any other paperwork surrounding your living will or your estate, so that there is no confusion after you’re gone.
It’s also a good idea to check if your workplace insurance policy can be changed to reflect a beneficiary other than your ex-spouse. You may find that your work policy will only allow you to name specific people (i.e. close relatives like your children) as your beneficiaries and that some policies will actually prohibit you from making a change of beneficiary in some situations.
Check the laws surrounding life insurance policies and beneficiaries in your state to see what changes you have the right to make and when. In some states, for instance, you may have to automatically name a new spouse as the recipient of a policy’s death benefit.
A new spouse in the picture
If you are getting divorced and planning on getting remarried soon after your divorce, you’ll have a lot to think about, especially if you have children from a previous marriage. You may want to consider setting up a trust to name as the beneficiary, instead of just blindly listing your soon-to-be spouse, especially if the policy was originally planned to take care of your children.
Most likely you took the life insurance policy out to protect your children financially if something ever happened to you. Make sure you don’t do anything that can jeopardize the original plan. If a trust is not something you want to do or can’t afford to do, you may want to think about talking to your life insurance advisor to get a separate policy and plan for the new marriage. This way you make sure the original policy does what you intended, which is take care of your children.
Get the billing right
One last thing to remember. Who pays for the policy? If your ex-spouse was paying for the policy, you need to make sure you get the billing updated. This will make sure there is no chance the policy will lapse by non-payment.
You should defiantly speak to your life insurance advisor and make sure you are getting sound advice. After all, it’s the ones you leave behind who will be left to clean up anything you don’t take care of now.
Checklist of things to do:
- Talk to you life insurance advisor for advice
- Contact the life insurance company to get change of beneficiary forms
- Check to see if your work life insurance policy beneficiary can be changed
- Talk to your attorney about a setting up a trust
- Think about getting a separate policy to cover a new marriage
- Make sure billing is updated and current