Life Insurance Considerations: Who Should Be the Beneficiary During Divorce?
Life insurance might not be the first thing on your mind when you’re navigating a divorce—but it should be. Beyond the policies you already own, there’s a good chance life insurance will play a role in your settlement. Whether you’re the policyholder, the insured, or the beneficiary, understanding how to structure and protect these policies during a divorce can make a meaningful difference in your future security.
Why Life Insurance Becomes a Divorce Issue
In many divorces, one spouse is required to pay child support or alimony to the other. But what happens if that spouse passes away unexpectedly? Life insurance can be used to secure those obligations essentially acting as a financial safety net.
In fact, many courts require the payor spouse to maintain a life insurance policy for the benefit of the recipient spouse or children. This ensures the support continues, even if something happens to the payor.
But even when it’s not court-mandated, reviewing your coverage—and your listed beneficiaries—is essential. If you or your ex are still listed on each other’s policies, those designations may need to change immediately.
Understand Ownership vs. Beneficiary Rights
Ownership of a policy and the beneficiary designation are not the same. The policyowner has control: they can change the beneficiary, cancel the policy, or take loans or withdrawals. If your ex owns the policy but you’re listed as the beneficiary, you may be vulnerable to unexpected changes.
In some settlements, the court requires the policyholder to not only list the former spouse as a beneficiary but also to name them as an irrevocable beneficiary. This adds an extra layer of protection because the designation can’t be changed without the beneficiary’s written consent.
If you’re the one relying on support, this detail matters. Make sure the policy is structured to guarantee the coverage actually stays in place.
Review Coverage Amounts and Duration
If a policy is being used to secure financial obligations (such as child support), make sure the coverage amount matches the liability. For example, if your ex is obligated to pay $1,500 per month for 10 years, you might request a policy with $180,000 in death benefit—plus a little cushion.
Duration matters too. A term policy that expires in five years won’t help if your alimony lasts for ten. Understand the type of coverage—term vs. permanent—and how long it’s expected to remain in force.
What If You Lose Coverage?
If you’ve been covered by your ex’s employer-sponsored life insurance, divorce may mean losing that protection. In this case, consider obtaining your own individual policy. Even if you’re in good health now, waiting could make coverage more expensive—or harder to qualify for—later.
If you’re receiving support, it may also be appropriate to ask that your ex pay for a policy on themselves, naming you or your children as beneficiaries.
Don’t assume life insurance is handled automatically in the divorce. It’s not. Without clear instructions in the decree and follow-up action, you could be left unprotected.
Need help reviewing or restructuring your life insurance during divorce? I’m Anastasia Herman—a licensed financial professional with New York Life. With a sharp analytical approach honed from years at BNY Mellon and State Street, and personal insight as a mother navigating divorce, I help women take control of their financial security—especially when lives and futures are on the line. Let’s set up a time to talk through your options.
Looking for more information? Connect today with Anastasia Herman!
