FAMILY LAW... & MORE

Purchasing life insurance while paying spousal support

| Oct 28, 2020 | Alimony |

If the court determines that you should pay alimony or you volunteer to do so, you may need to purchase a life insurance policy. You may then need to name your ex as a beneficiary. If you already have life insurance in place with him or her named as a beneficiary, you may not need to get a new one.

How much coverage you need may come down to your net worth and how much you pay in alimony.

What if you do not qualify for life insurance?

Most people get life insurance through work, but what if you are self-employed or retired? You may also live a certain lifestyle or work in a particular field that makes you uninsurable. Forbes reports that, in these instances, you may negotiate an alternative arrangement. One common option involves creating a constructive trust. This sets aside some of your assets and names your ex as a beneficiary so that he or she has continued support if you pass away.

Who owns the life insurance policy?

If you have the option of using a life insurance policy, your spouse may insist on owning the policy. This might help ensure that you do not make changes to the plan without his or her knowledge. Alternatively, your ex may allow you to own the policy but may require third-party authorizations. This also provides peace of mind that he or she may receive notifications if you make changes to the policy.

Life insurance policies may also become necessary for child support cases. This provides additional protection for your ex and your children, in the event that you die while they need your support.