Life Assurance After Divorce: Protecting Family and Children

It’s a common misconception that if you divorce, any life cover plans you may have shared with your ex-spouse become null and void. Sadly, this is not the case, and it is extremely important that you review your life cover needs promptly following these life changing circumstances.

Divorce is now commonplace. The Office for National Statistics states that 42% of marriages in England and Wales now end in divorce. This means a worrying number of people may find themselves in a position where benefit payments could end up with people other than their chosen beneficiaries, in the event of a successful claim.

Managing life insurance after a divorce is easiest if you and or your partner held separate life insurance policies. This means you can retain the policy to cover yourself in the event of death. However, care needs to be taken here as predominantly it is the ex-spouse who may have been named as the nominated beneficiary for any proceeds. It would therefore be the former spouse who would stand to benefit from any payment under a successful claim, should no action be taken.

Protection: How to protect your family and children after divorce

By contacting the relevant insurer, it is possible to remove or change the nominated beneficiaries on your plan. If the plan is held in trust, these too shall need to be changed should an ex-spouse be named as a beneficiary, or as a trustee, and this is not in keeping with your current wishes.

Should you be fortunate enough to have a Death In Service arrangement with your employer, the nominated beneficiaries can typically be changed directly with your employer by completing a nomination form. However, any life assurance payments associated with death claims on any of your pension funds shall also need to be amended by you. This is often something that is overlooked, but many pension providers now enable you to amend your nominated beneficiaries online, making it quite a simple exercise for you to complete.

For expert advice on Life Assurance and other financial matters why not book a call with a Financial Adviser from Integrity365.

There may be rare occasions where such arrangements may retain their initial purpose. For example, you might want to keep your ex-spouse as the beneficiary of any life insurance payment. This may be where the ex-spouse is the primary caregiver of shared minor children and rely on spousal or child maintenance payments from you. Alternatively, your ex-partner might want to take out a new policy on your life to protect the income they receive from maintenance payments.

Many people also hold joint life policies. If your ex-spouse is happy to do so, it is typically easier to agree that these policies are cancelled, and new individual plans considered together with your financial adviser. This will help to ensure you have the correct cover in place for you based on your new circumstances.

In some situations, you or your ex-spouse may wish to retain the joint life policy and remove the other life assured. This might make financial sense if some years have elapsed since it was taken out and you'd face higher premiums now that you're at a more advanced age.

This is possible, but you must apply for the other policy owner to be removed from the policy with your insurer via a legal document. This needs authority from both you and your ex-spouse, and the removal could therefore prove to be difficult, if the relationship ended on poor terms, or there is a lack of communication between both of you.

In addition to normal life assurance plans, seeking professional advice in the drafting of a new Will together with a review of any existing Lasting Powers of Attorney will also be a priority, even if these were not previously in place.

It is extremely important to seek the appropriate professional advice in these areas, together with the help of your financial adviser, to ensure your beneficiaries are protected in the manner in which you hope for.

Written by Marcus Rayer Chartered ALIBF, Independent Financial Adviser, Integrity365

Customer service is at the heart of everything Integrity365 do, from the early days of pensions and ISAs to investments and lump sum decisions, through to retirement and later life planning, they are here to support you through the key stages of your life with a holistic approach to financial planning.