Divorce is rarely pleasant. Issues like property division, child custody and alimony can be sources of contention for any couple.
With so much to focus on, it’s not unusual for some things to be forgotten – like your life insurance. However, most couples have each other named as beneficiaries, and this is likely something you will want to change after your divorce.
Don’t forget to disclose the cash value of your policy during the divorce
If you have a whole life or universal life insurance policy, it builds cash value over time.
When you pay your premium monthly, a portion of the money will go into the cash value fund, which grows thanks to interest. The cash value in your life insurance policy is your money, and you can access it anytime.
While this is true, the cash value of a policy purchased during your marriage is also a marital asset. If you file to list this for property division, it can cause issues and delays in the divorce.
Don’t forget to change beneficiaries on your policy when the divorce is over
You purchase a life insurance policy to protect your family from financial hardship if you pass away and can no longer provide for their needs. If you purchased your life insurance policy while you were married, your spouse is probably listed as the primary beneficiary. After a divorce, removing them from this role is a good idea.
When filing for divorce, make sure you remember to handle your life insurance policy according to the guidelines above. Your spouse is required to do the same. By making sure you do this, you can feel confident that you will receive what you are entitled to and protect yourself financially.