Anytime a major life change such as divorce occurs, it's time to sit down and review your insurance coverage. You might think that because you're single now, you need less life insurance or even no life insurance at all. But this isn't necessarily true.
If you don't have children, and no one else is relying on you for support, divorce will probably reduce your need for life insurance. After all, the main purpose of life insurance is to protect loved ones that are relying on your income. But in some cases, divorce will increase your need for life insurance. This could happen if you:
Have children who are relying on you for support (whether or not you are the custodial parent)
The terms of your divorce settlement may also affect your need for life insurance. For example, if you are responsible for paying child support or alimony, you may be required to buy life insurance with your ex-spouse as beneficiary or maintain life insurance coverage you already have.
An insurance agent or a financial planner can help you evaluate your coverage needs and options.
If your ex-spouse is the named beneficiary of your life insurance policy, he or she will be entitled to receive the proceeds when you die. To avoid this, update your beneficiary designations. Your insurance agent can help you with the necessary paperwork. If you don't have an agent, you can always call the insurance company and ask to speak to someone in the policyholder service department for more information. But don't name a minor child. Insurers generally won't make settlements directly to minors, and the probate court handling your estate may require that a trust be set up, and a guardian appointed, to manage the proceeds.
Tips on buying life insurance
Please note that this description/explanation is intended only as a guideline.
Copyright © 1998-2014 by Quinstreet, Inc. All Rights Reserved. Insurance licenses