Life insurance and divorce
Divorce doesn’t always have to be ugly, but the truth is that it can be an incredibly painful, stressful and emotional time for many people because it symbolizes the end. For others, divorce can be a relief because it gives them the opportunity to begin their lives again, in newer, hopefully happier circumstances.
Either way, when people do separate, something that’s often initially overlooked, when dividing up a household and assets, is insurance.
Some things to consider when you’re separating:
Beneficiary designation
If your ex-spouse is the beneficiary named on your current life insurance coverage, you may want to consider changing that. For clear reasons, you may prefer that a family member or close friend receives the money instead. However, if your former partner is raising your children or you are co-parenting, you may not want to change their designation as your beneficiary, considering the added expenses they’ll be solely responsible for, such as post-secondary education, if you were to pass away. If you do want to remove your spouse as your life insurance beneficiary, you can get the necessary forms from your insurance provider.
Spousal and/or child support
If you rely on support from your spouse, things get even more complicated. If they were to pass away and their support payments ended, would you – and any children you may have – be able to maintain your current lifestyle and make ends meet? If not, you may want to ensure that your separation agreement includes a provision stating that your former partner must have a life insurance policy of a large enough amount, with you named as the direct irrevocable beneficiary, to cover long term spousal and/or child support.
Existing life insurance
If you have your own life insurance coverage in place and have no financial obligations to your former spouse, you may want to consider naming your children as your beneficiaries to help ensure their future financial well-being, if the unthinkable happens to you. However, note that if you pass away before your child reaches the age of majority, the child’s guardian (tutor) or administrator is responsible for managing that money under Quebec law until they turn 18. This would generally be your former spouse. Consult a lawyer to ensure you make the best legal decision.
New life insurance
If you don’t have your own life insurance coverage, you may want to consider getting it now, especially if you have a growing family and/or or other people who rely on you financially.
Good to know!
Car and home insurance
Make sure the name on your homeowner’s insurance is the same as the name on your home title and car ownership. If you had home or auto coverage through your former spouse, you’ll want to get replacement coverage as soon as possible. There’s no question that divorced is difficult. The best way to ensure that your insurance needs are handled correctly is to seek independent legal advice. If you are considering taking out a new policy or increasing the amount of a policy you already have, life insurance offers economical coverage for every age and stage of your life. Married – or single.