Life insurance and divorce

On Behalf of | Jul 5, 2021 | Divorce |

Divorce can be a daunting task. In North Carolina, the court system considers various financial issues such as life insurance before the process is complete. Most married couples purchase life insurance, and their partners appear as the next of kin in the list of beneficiaries. However, if the couple divorces, the dynamics change, and they must both make vital decisions during the settlement.

Why couples must know how to handle life insurance after divorce

The significance of life insurance within a marriage is to fulfill various financial obligations and projected expenses if one spouse dies. When a divorce occurs, settlement negotiations typically cover whether an individual still needs to meet these obligations for their former partner.

Make sure you have a list of your insurance policies before the case begins. Additionally, you need to have documents of all your properties and assets that have insurance coverage. In some states, the legal system requires an affidavit to prove that you have insurance. You and your partner should both determine the costs of retaining the policies.

Some couples undergoing divorce own cash-value policies. Most couples end the policies and split the accrued cash. A term life insurance policy might require that you interchange the beneficiary and owner. However, you must be prepared to handle the surrender charges that will affect the total amount after the split.

Ask for professional assistance

There are various questions that you will ask yourself during divorce proceedings about life insurance. When completing an assessment of the policy that you and your spouse acquired together, you may want professional help to answer these questions. An attorney may be able to decipher various issues for you.

An attorney may assist you in determining which course of action is best for you, such as whether to sell the policy and split it or continue contributing. You might be stressed about finances with the pending divorce case, so a professional may provide valuable, practical guidance.