The Legality of Forced Life Insurance Policies in Divorce

By Heather Frances J.D.

Divorce may not end the spouses’ dependence on each other; one former spouse may rely on the other for ongoing child support and alimony payments. If the paying spouse dies, the receiving spouse may find it difficult to make ends meet, so a divorce decree can require one ex-spouse to carry a life insurance policy and assign the proceeds of that policy to the other ex-spouse.

Settlement Agreement

In a divorce, it’s common for a couple’s property settlement agreement or divorce decree to order one spouse to assign the proceeds of a life insurance policy to the other spouse, typically to secure the paying spouse’s obligation to pay alimony or child support. The settlement agreement may be drafted in a way that gives specific instructions to each spouse about their involvement with the life insurance policy. For example, the settlement agreement may specify the type of policy and amount to be procured, beneficiaries to be listed, and length of time the paying spouse must maintain the policy.

Problems

Even if a couple’s settlement agreement appears clear, problems can arise when one spouse is forced to carry a life insurance policy. For example, the spouse who is forced to maintain the policy might let it lapse or change the policy's beneficiaries. To prevent such problems, the spouse protected by the policy can ask to be notified if payments on the policy lapse. In the alternative, the protected party can become the owner of the policy.

Divorce is never easy, but we can help. Learn More

Federal Insurance

If the spouse being forced to carry life insurance is a federal government employee, the other spouse can submit the court order to the covered spouse’s human resources office at his place of employment. Under federal law, the court’s order controls the payment of death benefits provided by the Office of Federal Employees’ Group Life Insurance, so by submitting the court order, the receiving spouse guarantees she will receive these life insurance benefits when the insured spouse dies. Typically, a certified copy of the court order is submitted shortly after the divorce becomes final and before the insured spouse dies.

Claims Against the Estate

If the deceased spouse failed to maintain a life insurance policy in accordance with a settlement agreement or divorce decree, or changed the policy's beneficiaries before his death, the receiving spouse may make a claim against the deceased spouse’s estate. As long as the decedent has sufficient assets in his estate, the receiving spouse could get as much from her claim against the estate as she would have received from the proceeds of the life insurance policy had it been properly maintained by her ex-spouse.

Divorce is never easy, but we can help. Learn More
Ohio Health Insurance to a Spouse Post-Divorce
 

References

Related articles

Does a Divorce Decree Nullify a Life Insurance Policy?

The issue of life insurance is a central point in many divorce actions. If you are considering divorce, you will have to take into account ownership and designated beneficiaries of any life insurance policies. The marital settlement agreement will settle the status of the insurance and set out any requirements for how it should be handled after the court finalizes the decree.

How to Notify Social Security of the Death of a Beneficiary

A disabled person or retired worker may receive Social Security benefits. The money is paid monthly to the beneficiary, with the amount based on many factors, including how long the person worked. If a loved one who was receiving Social Security benefits dies, the surviving family, such as a spouse, is responsible for reporting the death to the Social Security Administration. If you fail to report the death and continue to receive the deceased's benefits, you may face legal action by the administration.

Divorce & Distribution of Life Insurance Benefits

Life insurance needs often change with divorce. Depending on the type of insurance, the life insurance policy can even be divided as marital property in your divorce decree. If you choose to list your ex-spouse or your child as the beneficiary of your policy after your divorce, make sure the beneficiary designation is in accordance with your state’s laws to avoid unintended results.

Get Divorced Online

Related articles

Can One Spouse Cancel a Joint Insurance Policy During a Divorce?

Divorce can take several months from start to finish, and spouses sometimes find it difficult to work together on ...

Collecting Unpaid Alimony When a Spouse Dies

When you rely on alimony from an ex-spouse, it can be financially devastating when that individual dies. Typically, ...

New York State Health Insurance Rules When Getting a Divorce

New York does not require health insurers to provide health insurance for divorced spouses, so one spouse may lose ...

Divorce Laws Regarding Insurance in Wisconsin

For some couples, insurance coverage is a significant factor in their divorce, because terminating a marriage often ...

Browse by category
Ready to Begin? GET STARTED