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How life insurance can help your family during a divorce


One of the most challenging aspects of the already stressful divorce process is agreeing how the two sides will split joint assets. As part of the discussion about how to divide property and investments, it’s important to consider how divorce might affect your life insurance policies.


Divorce trends and beneficiary shifts

Research suggests that about half of today’s marriages are likely to end in divorce, if current divorce and widowhood rates persist.1  However, the Pew Research Center found that four in 10 divorced people aged 25-34 remarry, with the likelihood of remarriage increasing for people age 55 and older.2
When planning your revised financial future, keep in mind that life insurance can be one important way to help protect your family’s financial security. Both divorce and remarriage may impact your life insurance planning.


Divorced couples with children

Alimony and child support are often major components in divorce settlements. Both involve one spouse providing a means of income for others in the family after the divorce is finalized.

However, if the spouse providing alimony and child support passes away, it might lead to a loss of income for the surviving spouse. Even if there are no children involved, the remaining spouse could still rely on this source of income.

If you have kids, you can put potential financial safeguards in place to help your children in case something happens to you or your ex-spouse. Some divorcing spouses choose to purchase a life insurance policy for an ex-spouse to provide income to help raise the children or to fund additional childcare should the primary caretaker pass away.

Term life insurance coverage on both parents may be one way to help provide financial protection for children, should anything happen to either parent before the children become adults. Term life insurance is generally less expensive than a whole life policy and has level premiums for a specific period of time – usually 10, 20 or 30 years – or until a child becomes an adult.

You may be directed by your divorce decree to make changes to an existing life insurance policy or to purchase new policies, so be sure to talk to your attorney or judge about the best way to address these obligations.


Remarrying with stepchildren

If you remarry after a divorce, and particularly if you and your new spouse come to the marriage with children from a previous relationship, it’s important to review the beneficiaries listed on your life insurance policies. You may want to include new stepchildren as beneficiaries to help provide financial support in the event that you or your new spouse should pass away. Divorcees should also review the court documents dissolving their previous marriage, since these might specify actions you may need to take in connection with how biological children are covered by life insurance.

While each family will have their own unique dynamics during a divorce or remarriage, everyone involved will benefit from planning ahead. A life insurance policy might provide a source of income in case the person paying the alimony or child support passes away.

If divorce or remarriage is happening in your life, consult with your attorney and perhaps a financial planner as you prepare for these life situations. Your Farmers agent is ready to help you choose the policies you may need for your new financial responsibilities.
return notePhilip N. Cohen, sociologist, University of Maryland, College Park. June 8, 2016. https://familyinequality.wordpress.com/2016/06/08/life-table-says-divorce-rate-is-52-7/
return note2Livingston, Gretchen. "Chapter 2: The Demographics of Remarriage." Pew Research Center's Social & Demographic Trends Project. Pew Research Center, 14 Nov. 2014.  http://www.pewsocialtrends.org/2014/11/14/chapter-2-the-demographics-of-remarriage/
Farmers New World Life Insurance Company, 3003 77th Ave. SE, Mercer Island, WA 98040.
Securities offered through agents registered with Farmers Financial Solutions LLC (In NY: Farmers Financial Solutions and Insurance Agency), 30801 Agoura Road, Building 1, Agoura Hills, CA 91301. Member FINRA & SIPC.

IC-0217-A     04/17

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