Most people buy life insurance to protect their family, including their kids and a significant other. If you and your spouse were to divorce, however, the value of your life insurance policy would suddenly come into consideration.

Whether you are considering a divorce or are in the process of filing, here are a few items to note regarding your life insurance policy.

You Could Be Legally Required to Maintain Coverage

Depending on your divorce agreement, you might be legally required to keep your life insurance policy intact, possibly with the same level of coverage. This may be true even if you will no longer share certain household expenses with your former spouse.

Life insurance benefits are often considered in situations where spousal or child support is required. In either case, your decree could mandate that you continue paying into an existing policy or even buy future coverage, with the intent of financially protecting your ex and/or shared children.

You May Need to Buy Additional Coverage

In some instances, you may be required to purchase a new life insurance policy following a divorce, or increase your current level of coverage. This could happen for a number of reasons, including:

  • You had spousal coverage through your ex’s workplace plan, which you will now lose
  • You had a joint life insurance policy that you don’t plan to keep in force

If you get remarried and start a new family, you will likely need more coverage to account for any new beneficiaries you are taking on.  

You May Also Need Less Coverage

In the alternative, following a divorce, you might not need as much life insurance coverage as you did previously — if any at all.

For instance, if you no longer share debt with a spouse — such as a home mortgage or credit cards — and don’t have any children, there may not be any major reasons to keep your policy. If you still have debts of your own, however, or if you split/shared debts during your divorce, you could lower your coverage to account for your revised debt burden.

And if you have minor children, you may just want to reduce your coverage to protect them and/or your individual estate.

Your Beneficiaries May Change

If your spouse is your life insurance beneficiary, this designation will legally be revoked in some states following your divorce (even if they are still technically named as your beneficiary). This means that others could contest the policy's benefit when you pass away.

For this reason, it’s important to know what your state’s laws are regarding life insurance beneficiaries and divorce, as your legal will and/or divorce decree may not supersede your policy.

If you do not want your ex to receive your life insurance benefits, you should manually remove them from your policy. The policy’s payout would go to your alternative beneficiary instead or, if one is not named, it would go to your estate through probate.

If you do want your ex-spouse to be your beneficiary — either to provide spousal support or protect your shared children if you pass away — you’ll need to re-designate them as beneficiary through your carrier, unless you live in a state where this is done automatically. Failing to do so could result in a lengthy probate process, which could impact your children following your death.

Bottom Line

Divorce is an unexpected, but not uncommon, part of life for many people. If you are facing or going through the divorce process, there are many financial considerations to keep in mind. Your life insurance — whether you have an existing policy or need to purchase new coverage — is one of them. Knowing what you need, and how to adjust your coverage accordingly, can help ensure that those you love are always protected.

Looking to buy (or adjust) coverage for your loved ones following a divorce? LeapLife is here to help you figure out the terms that work right for you. Our platform makes it quick and easy to protect the important people in your life, helping you get matched with A-rated (or higher) life insurance carriers across the country. Coverage up to $5 million is available, with term life policies up to 40 years.