Financial advisors often recommend that their clients purchase a term life insurance policy if they are the main breadwinners for the family. With a life insurance policy in effect, the family will have money that replaces the main breadwinner’s salary for the number of years that the surviving spouse needs to continue raising the family. If the policy holder can afford it, he or she can add a sum of money that also provides for the children’s educations.

Sometimes, the other spouse is not earning money in a job outside the home. These spouses are not left out of the life insurance equation because they also need to purchase a term life insurance policy for the services they are providing to their families. Financial advisors will remind their clients that these stay-at-home spouses are performing duties that will need to continue to be done if the parent were to pass away, such as the housecleaning, cooking and caring for the children. A term life insurance policy leaves the surviving spouse with the money to pay for someone to do these duties.

When Life Insurance Is Required During a Divorce

When couples are in the unfortunate situation of considering filing for divorce, the considerations described above do not change. They still need to ensure that their families are provided for and that the surviving spouse has sufficient funds to pay for everything they need to continue raising the family. For this reason, people who are required to pay their exes spousal support as well as child support may also be required to purchase a life insurance policy. The breadwinner of the family, whether the man or the woman of the house will have to pay for policy and make their ex-partner the beneficiary.

The Advantages of Term Life Insurance for Divorce

Term life insurance would be an appropriate life insurance policy for those going through a divorce because it is the most affordable way of purchasing life insurance. The policy is referred to as a low cost term policy because it will be in place for a set number of years and is referred to as the term. The ex-spouse can purchase a policy for five years if the children will all have reached age 18 by that time. If they have very young children, they can purchase policies for as long as 20, 25 or even 30 years, and they will be much less costly than a permanent policy.

Purchasing a Term Life Insurance Policy

With a term life insurance policy, people only need to qualify once. This means that they will have to take their physical examinations when they apply for the policy. Then, their rates will be set according to the state of their health, how they live their lives and their medical histories and any high risk medical conditions they may have. Their rates will remain in effect until the policy expires as long as they diligently pay their monthly premiums throughout the life of the policy. If they survive the term, they do not have to renew the policy if it no longer suits their needs. For people in good health, there are no medical exam life insurance policies available, but they do tend to be twice as much as a medically underwritten policy.

The Flexibility of Term Life Insurance for Divorce

In the case of divorce, the ex-spouse who was required to take out the policy may cancel it early if the purpose was only to provide support for the children. For example, the parent may only need to maintain the policy for three years when the youngest child turns 18, but he or she only has the choice of purchasing a yearly policy or a five-year policy. A yearly policy needs to be renewed and becomes more expensive with every renewal. The option here would be to purchase a five-year policy that can be cancelled after three years and will cost less than renewing every year.

Alimony payments will often last for a certain number of years, and the court can order a life insurance policy that will guarantee that the spouse will have this amount of money if the ex-spouse were to pass away. Term life insurance is an excellent option for spouses paying spousal support as well. These supporting ex-spouses can choose the sufficient number of years they need to be insured, and allow it to expire or cancel it after that time has passed. Some spouses are required to carry up to a million dollar of life insurance for the purpose of paying off a spouse in the event of their death.

Naming the Beneficiaries

A term life insurance policy allows the policy holders to choose who will be the beneficiaries of the death benefits. In the event that the policy is being purchased solely for the benefit of an ex-spouse and the children, the ex-spouse purchasing the policy can name the custodial parent as the owner of the policy. You can also name a life insurance trust as the beneficiary, and name the custodial parent as the trustee. This is also will benefit the beneficiaries by not having to pay estate taxes on the life insurance proceeds. If the non-custodial parent maintains control of the policy by remaining the owner, then he or she can change the beneficiaries at any time. To avoid this possibility, the custodial parent may want to negotiate the need to be the named policy holder.

Finding the Best Price

It’s easy to receive a quote for term life insurance for divorce just because you are here on this website. Fill out the application and the comparison tool will give you several advantageous quotes to compare for your life insurance needs.

Mozdex Insurance Advisors have helped thousands of families secure their futures with proper insurance planning since 1997.