Marriage, Divorce And Life Insurance Companies
How Marriage And Divorce Affect Your Life Insurance Policy
No matter whether you've just gotten married or divorced, there's no doubt that both of these major life events will greatly affect your insurance needs. Marriage and divorce will each require specific alterations to your policy, and each have a particular process that needs to be completed to make these changes successful.
Marriage And Life Insurance
Many married couples wonder if they even need life insurance. And the answer is that life insurance is more important than ever when you get married. And although it may not seem important at the outset, life insurance takes on more importance when you've made other investments together, such as purchasing a house or having children. Should something happen to your spouse that leaves the house payments and cost to raise your children in your hands alone, you will be glad you had life insurance there to make up the needed income.
If you're a young couple, then term life insurance may benefit you most, because it tends to be the most cost-effective and flexible option. And it's even more affordable if you're a healthy individual.
When considering the length of coverage, factor in from 7 to 10 times your yearly income. This will allow your spouse to invest the money into funds, and use the interest as replacement income.
Common Life Insurance Mistakes Married Couples Make
When you were single, you may have relied in the group insurance provided by your employer. But this should definitely not be the case if you are now married, as your work coverage won't be enough for the needs of your new family. As well, that work coverage won't be there if you leave your job.
Many couples who get remarried forget to check who they've named as beneficiaries on their policies. Most often, it's an ex-spouse. Checking this part of your policy is a good idea so that your money goes to whom you intended.
Divorce And Life Insurance
Divorce is something that may not be pleasant, but it is still a life event which will affect your insurance coverage. With all of the confusion, pain and unknowns which surround many divorces, it's no wonder that insurance tends to fall by the wayside in divorce settlements.
Another reason life insurance policies tend to get neglected in divorce settlements is because of the confusion that surrounds them. Insurance policies can be used to manage risk, as well as to accumulate wealth. So how can this be divided equitably between a couple who divorces?
If there are financial obligations such as child support or alimony at play, then both life and disability insurance can be used to continue payments in the event the paying ex-spouse becomes disabled or loses their life in an accident.
Where financial obligations are concerned, whichever ex-spouse stands at the receiving end of benefits should be named on the policies as owner and beneficiary. This also means that the policy owner will be responsible for the premium payments.
Re-Assess Your Policy
In addition to beneficiary details, you will definitely want to review the coverage details of your life insurance policy. If you are now the parent with primary custody, this means you are also their primary support system, which will translate into more coverage. If you didn't have insurance prior to your divorce, now is definitely the time to get coverage if you've recently become a single parent due to a divorce.
As well as a term or whole life policy, you may also want to consider taking out a specialized policy from life insurance companies that covers you for long term care. You may also wish to consider an annuity, which will assist you with funds when you reach retirement age.