If you are going through the process of a Divorce Property Settlement, it’s important to understand the impact it may have on your Life Insurance policy.
The divorce settlement process normally involves performing a stock take of the marriage’s property and other assets, and it’s important here to remember to include your life insurance policy, whether it be a money-back term life policy or a term life insurance or term life insurance and total permanent disablement policy.
If you are holding a ‘Whole of Life’ or ‘Endowment policy’, the surrender value will possibly be taken into account as part of the divorce settlement calculations.
If you are the holder of the more common term life policy or term life insurance and total disablement policy, there is no surrender value to be taken into account, but it’s important to ensure that you review who the policy owner is (this could be in joint names or each policy owned separately) and who are the named beneficiaries to the policy, just as you would revise your will following a divorce.
Regardless of the type of life insurance policy you hold you need to review your insurance policies prior to your divorce settlement. There can be many implications if this is not handled in the correct manner.