Life insurance issues due to divorce

On Behalf of | Feb 28, 2022 | Divorce

Going through a divorce is a difficult time. It can be an extremely emotional experience and you’ll have a lot of different issues to deal with. Life insurance may not be at the top of your priority list but it’s important to understand what can and will happen with regard to life insurance policies.

Pre-existing policies

For married couples who have life insurance policies, it’s very common for them to name their spouse as a beneficiary. However, what many couples don’t realize is that, when a divorce is finalized, that beneficiary status ends automatically. New Jersey Statute Section 3B:3-14 contains what’s known as revocation upon divorce. The statute mandates that certain designations, including that of a spousal beneficiary in a life insurance policy, end as a result of the divorce.

The reasoning behind revocation upon divorce is an assumption that former spouses likely do not want to retain these types of designations beyond the divorce, but may not think to change them. But there are circumstances where one spouse may wish that their former spouse remains as a beneficiary. When this is the case, the statute can be circumvented by an order in the final divorce degree or by reauthorizing the life insurance policy itself.

Life insurance policies after divorce

Sometimes a family court will order one spouse to maintain a life insurance policy, with the other spouse as beneficiary, after the divorce has concluded – even if no policy existed during the marriage. The purpose of such an order is to provide protection when alimony is awarded. If the spouse ordered to pay alimony were to pass away, the spouse receiving it would be left without. A court may choose to order that a life insurance policy be maintained, in an amount determined by the alimony, to insure against such an unfortunate event.


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