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In This Article I’m Going To Discuss Why It’s Important To Have Life Insurance As A Part Of Your Divorce Decree Or Divorce Settlement
Most likely you’re reading this article today because you’re either in the midst of a divorce and you’re working out the details of what’s included in your divorce decree. You may be considering including life insurance as an important element of the divorce mandate.
Most likely are looking for tips and tricks on how to get life insurance. Whether you are the ex spouse who will be paying child support, or you are the recipient of the child support and are looking to ensure your ex spouse against the potential for death. If either situation applies to you, or you simply want to learn more about life insurance and the role it can play after divorce, then please continue reading.
NOTE: Would you prefer me to present this information to you in video format? Watch the video below for the complete presentation. Enjoy!
Here’s An Overview Of Today’s Topics:
- What Are The Reasons To Include Life Insurance In Your Divorce Settlement?
- How Much Coverage Should You Get?
- What Type Of Life Insurance Is Best To Include In A Divorce Settlement?
- Should You Get An Exam?
- Burial Insurance Rates, Age 40 To 90*
What are the reasons to include life insurance in your divorce settlement?
One of the most common questions that I get asked by couples in the midst of divorce is why it’s important to add in a requirement in the divorce decree for the child support or alimony payer to have insurance. The reason is very simple.
Regardless of the reasons for divorce, there generally is a breadwinner in the marriage who earns the vast majority of the income. And due to the divorce, what tends to happen to the spouse who receives custody of the children is that they don’t have the necessary job, skills, education or capability to equate their income to what it was before the divorce.
This is why courts determine that it’s important to come up with a settlement between spouses where the spouse without children will provide a financial ongoing commitment to take care of the children as part of their responsibility as a parent. There in lies the problem.
While this is a good plan of action and determined to be fair between both parties, what cannot be guaranteed within the contract explicitly of the divorce decree is whether or not that person paying the child support will live long enough to pay all of the child support required by law.
Imagine for a moment what would happen if your ex spouse were to pass away. Not only do your children lose a parent they love, but they also lose the monthly income that you’re receiving from your ex.
What kind of impact would that have on your children? Would they not be able to do the same level of activities, go to the same school and essentially live the same lifestyle that you currently enjoy? Would you have to potentially move? Would you potentially have to take them out of the environment that they’re comfortable in?
These are all real life questions that as difficult as they are to consider are definitely something that could have a major impact on you as a recipient of child support. The same goes for those of you who are considering buying life insurance as the payer of child support.
As much as you probably don’t like the idea of paying child support, I’m sure the greater concern is what would happen to your children if they didn’t receive the money that you pay?
How would their lives be affected? How much of a negative impact would it have? Would you want your children to suffer if you died abruptly and unexpectedly? So these are the main precursors and motivations as to why it’s important to include life insurance along with your divorce settlement or a divorce decree.
How much coverage should you get?
Coverage amount totally depends upon what you and your ex spouse negotiate. It’s going to depend upon the amount of child support that is paid every month and the total paid in over a period of time. So you’ll have to determine the amount individually and find a plan that meets that requirement.
Additionally the other consideration you need to make is how long the life insurance should last. Again, this is a negotiable element of the divorce decree, but in my opinion your divorce life insurance settlement should cover for the length in which the children are dependents and you’re responsible for paying child support.
So let’s say for example you have a five year old involved in the custody case. When they reach 18 they become adults and child support stops. Ten years of a term insurance plan would be too short of a time period to cover for the entire 13 years. Alternatively an insurance plan that would cover for 15 years would definitely do the job and provide total comprehensive coverage if you died.
What type of life insurance is best to include in a divorce settlement?
There’s generally two different types of life insurance plans available. What I’m going to provide is a quick description of both, the first being permanent life insurance and the second being term life insurance or temporary life insurance, which is usually the most appropriate plan included in a life insurance policy when child support is involved.
Permanent life insurance generally provides a permanent coverage option for permanent needs. Most commonly you see permanent life insurance, usually known as whole life or universal life insurance, covering permanent obligations such as estate taxes, buy-sell arrangements between business partners and final expense coverage to pay for burial and cremation.
It is unlikely that a permanent life insurance plan will be used in a divorce decree. Why is this the case?Because the nature of the life insurance policy does not necessarily match the nature of the divorce decree. After all, child support is a temporary obligation. All be it a long-term one, but it is not something that is permanent.
It’s more likely you will be looking into what’s known as a term or temporary life insurance product. Just as the name describes, term or temporary insurance only lasts for a temporary period of time. It’s life insurance that you won’t necessarily have for the remainder of your life because it is purchased to cover temporary obligations.
And in the case of the divorce settlement, where child support is paid, this by default is a temporary obligation. It’s very rare that somebody who is paying child support is forced to pay child support the remainder of his living life. Usually child support ends upon graduation from high school. So it’s likely that term life insurance makes perfect sense to cover for that temporary period of time.
Should you get an exam?
When you’re looking to add life insurance to a divorce decree you also have to decide if you want to get an exam with your life insurance application.
Generally speaking, I recommend an exam based life insurance plan for both parties because if the person paying the premiums is in good shape it’s very likely that you’ll get a better overall package deal for your life insurance than you would if you did a non-medical application process.
The more information the life insurance company has on you, the better the chance you’ll get a lower priced premium. Whereas with a nonmedical policy many times you pay for the convenience of the non-medical policy. This could be as much as 50% more than you would pay with an exam based application.
Of course, for those in bad health, a non-medical application may be the best option. If this is the case you may be forced into what’s called a simplified issue, whole life term insurance policy which is non-medical, but pulls limited medical records to give you the ability to get coverage. It does often cost a little bit more, which is why I don’t necessarily recommend it unless necessary.
Another reason to look at a non-medical application process is if you need to get life insurance in place quickly and can’t afford to wait the month or two period for a fully underwritten process. A policy that doesn’t require an exam usually takes a week to two weeks to get approval, assuming there’s no major health issues or blemishes on your medical record.
Burial Insurance Rates, Age 40 to 90*
Rates For $5,000 In Burial Insurance
Rates For $10,000 In Burial Insurance
Rates For $15,000 In Burial Insurance
Rates For $20,000 In Burial Insurance
Rates For $25,000 In Burial Insurance
*Burial insurance premiums are subject to underwriting, based on rates as of 8/20/2018, from state-regulated life insurance companies offering final expense burial whole life insurance protection. Understand that in order to potentially qualify, you must submit an application to see if you’re eligible. Rates are subject to change. Give Buy Life Insurance For Burial a call at 888-626-0439 now to see what program you may qualify for.