Divorcing Couples Insurance Needs; Life Insurance, Disability Insurance, Group Insurance

In today's world, it's a fact that about 60% of marriages end in divorce. Many divorcing couples have financial responsibilities to each other for various reasons. Life insurance and disability insurance should be put in place and maintained in order to meet those financial responsibilities.

I want to review what would happen financially and how to protect the survivors, in the event of a premature death, or a living death.

When there are children in a divorce, there is usually a support agreement for the benefit of the children. There is a long term, (depending of course on their ages), requirement of cash to meet those support payments. In many cases there are spousal support payments too. A child of 5 years of age may require a committment of 20 years of financial support if a post secondary education were to be pursued.

If the person were to die while those financial responsibilities are still outstanding, the value of those support payments should be backed up with life insurance. The recipient of the payments should be the beneficiary of the life insurance and in fact, that designation should be an irrevocable designation. Once the financial obligations of the divorce agreement have been satisfied, then the insurance can be cancelled. This obligation can be funded with some very inexpensive term insurance.

A disability is often referred to as the "living death". The person is unable to work and generate income, yet still has ongoing expenses, including support payments. Again, an appropriate amount of disability insurance should be put in place to make sure that financial committments, from divorce agreements, can be maintained. A person when disabled, will still have an income stream to meet support commitments.

This is an area that is often overlooked, but more divorce lawyers are considering these arrangements as part of settlement agreements.

Most insurance companies that provide group insurance benefits, allow children to be maintained in a benefit package for health and dental plan, even though the children may not be in the "custody" of a parent. Consideration should be considered as to how health and dental costs will be paid or shared in the future, should the supporting parent lose benefits while still under a support agreement.

This is just a very brief overview of areas of consideration when a divorce will be taking place. You should contact me directly for any specific questions you have about your personal situation.

Johnny V