Navigating life after divorce involves many financial considerations, and one crucial aspect often overlooked is life insurance. I recently had the opportunity to contribute to an article for MoneyGeek on this topic. I shared insights on how life insurance can be vital in securing your financial future post-divorce. Whether you’re reevaluating your policy or considering new coverage, this article provides valuable guidance to help you make informed decisions during this significant transition.
Given the importance of proper life insurance in protecting your financial plan, I wanted to share my thoughts from the article in today’s post. I have also linked to the full article below.
Can you remove your ex-spouse from your life insurance policy?
A life insurance policy has three responsibilities:
- Owner: the person who purchased the policy and who pays the premiums
- Insured: the person whose life is insured (frequently also the owner, but that is not required).
- Beneficiary: the person who will receive the payout if the insured dies. If you are both the owner and insured of a life insurance policy, whether through work or privately, you control who the beneficiary is. In many cases, spouses purchase policies for themselves (owner and insured) and then name their spouse as the beneficiary. If you did this and are now divorced, you can change the beneficiary to someone else (like a child or other family member). However, be sure to keep in mind any agreements related to life insurance you made as part of your divorce settlement.
Can you keep life insurance on your ex-spouse after a divorce?
In order to have a life insurance policy with someone besides yourself as the insured, you must have an insurable interest in that person’s life. You can’t just take out insurance policies on random strangers because that creates dangerous incentives. However, if you receive alimony or child support, you have an insurable interest in your ex-spouse’s life. If your ex-spouse dies, then the alimony or child support will stop immediately, which could be catastrophic to your financial situation.
I always recommend that if you receive any kind of support payment from your ex-spouse, you take out a life insurance policy to protect the lifetime value of those payments. You would be the owner, your ex-spouse would be the insured, and you would be the beneficiary. You must be the policy owner and make the payments to ensure that the policy stays in force and that the beneficiary remains you. If you rely on a policy that your ex-spouse owns, they could stop making payments or change the beneficiary at any time, and you would never know until it’s too late.
What should you do about life insurance policy after a divorce?
After a divorce, reviewing any life insurance policy you own is important to see if it still makes sense. Who is the beneficiary, and does it make sense in light of your current situation? Is the amount of coverage right, or do you need more or less since the divorce? You should also consider if there is a new need for a policy on your ex-spouse to cover any ongoing payments they owe you as part of the divorce should anything happen to them (see prior question).
You can read the full article on MoneyGeek.
Sara Zuckerman, CFP®, CDFA® is the founder of Reset Financial Planning located in Scottsdale, AZ. She supports women across the country with a focus on helping divorcees and widows align their financial resources with their values to plan for the next chapter of their lives.
If you are interested in learning about how Reset Financial Planning can help you take charge of your finances as a newly single woman, please contact us at or schedule a free 20-minute consultation.
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Disclaimer: This article is provided for educational, general information, and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for the purchase or sale of any security, or investment advisory services. We encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Reset Financial Planning, LLC, and all rights are reserved.
