Can You Use Life Insurance as A Divorce Settlement?

divorce-decree-curved-bannerLife insurance can be used as a divorce settlement in some states. A judge may decide to use your insurance proceedings to settle a divorce, or you can discuss the future of your policy with your spouse. If you do not have coverage, you can search for online life insurance plans to find affordable rates.

A life insurance plan does not count as an asset. This means that your ex-spouse will not be able to claim half of your policy. As long as you are the insured and the policy holder, the life insurance plan belongs entirely to you.

The person you name as a beneficiary will receive all the insurance proceedings guaranteed by your policy. Keeping your ex-spouse as a beneficiary may not be a good idea, especially if you have custody of the children. In some cases, life insurance proceedings can be a divorce settlement as children can be named as beneficiaries.

The judge will mostly decide to use life insurance as a divorce settlement to provide financial security for the party that gains custody of the children. If custody is shared, the policy may not be as important for the whole process.

What to do with a policy during divorce proceedings

It is recommended to keep the policy active and to change the beneficiaries. You can change the beneficiaries at any time throughout the policy’s duration by calling the agency that issued the plan.

By naming children as beneficiaries you will provide financial protection for the most important persons in your family and your investment will be safe. When naming children as beneficiaries, it is recommended to open a trust fund and to have the insurance proceedings directed there if the beneficiaries will not be of legal age.

The trust account should be managed by an attorney or by a person you trust. Trust funds are important for keeping your life insurance proceedings safe.

If you need more information about life insurance, visit our website. You can also compare free online quotes to find the best prices.