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Life Insurance and Divorce in South Carolina

Posted by J. Benjamin Stevens | Jun 22, 2014 | 0 Comments

If you're in the midst of a South Carolina divorce, it may not occur to you to ask questions about your spouse's life insurance policy. With more pressing concerns like child custody, visitation, support, alimony, and the division of your marital assets, issues like life insurance might seem secondary.

However, experts say that it's a potentially devastating mistake to overlook the importance of life insurance and divorce, given that insurance can often act as a crucial way of securing the value of your divorce settlement. Without the life insurance, if your former spouse has an unfortunate accident or unexpected illness, it could be financially devastating if you are relying him or her for child support or alimony payments.

Why life insurance is important?

Normally, life insurance exists to replace the income of the primary wage earner in a household. When couples are married, this insurance money is used to support his or her spouse and children. Though you may not have a spouse to support anymore, life insurance is still important following a divorce – especially in cases where others depend on your income.

For instance, if you are required to pay child support or alimony, someone else depends on the continued stream of income for their own care and support. Life insurance can be used to ensure that these payments continue to be made if something happens to you before your obligation ends. Though you may not be as concerned about your former spouse, you certainly want to ensure that your children's financial needs are addressed.

What to watch out for in a divorce

If you are the recipient of alimony or child support, it is crucial that you talk with a South Carolina family law attorney so that you fully understand the importance of securing these future payments through life insurance. As with many areas of family law, this is not as simple as it might appear, as there are many details that go into doing this the right way.

For instance, you obviously need to ensure that your former spouse is required to obtain the life insurance coverage within a specified period of time and for an amount large enough to secure the obligations owed. This may be done by using an existing policy or by purchasing a new one. It is equally important to ensure that the language in your Divorce Decree requires him or her to maintain this coverage (without changing the beneficiary) for the proper length of time. You should also consider what will happen if he or she cannot obtain the necessary coverage.

What type of insurance is required?

There are two main varieties of life insurance: term and whole life. Term life polices are written to last only for a designated number of years, usually 10 or 20 year periods, after which the coverage expires. Term policies do not build any cash value, so the policies are usually not terribly expensive.

Whole life polices (sometimes called permanent insurance) lasts for the insured's lifetime, and the premiums are typically level and guaranteed for the life of the policy. Whole life policies build cash value, so that amount should be taken into consideration when allocating the marital assets.

Source: “Divorce Questions: How Can Divorce Affect My Life Insurance Policy?,” published

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J. Benjamin Stevens

Senior Partner


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