Understanding Life Insurance And Divorce

Going through a divorce can either be rocky, or it can be a mutual meeting of the minds. If the latter is true, then you will want to ensure that you can financially provide for your children, even if you are no longer with their mother or father. A life insurance policy is a great way to ensure your children are taken care of if you pass.

What Is Life Insurance?

Life Insurance is essentially a contract between the policy owner and the insurance company. As the policy owner, you agree to make monthly payments, called premiums. In turn, your insurance company agrees to pay a lump sum amount of money, called a death benefit, in the event of your death or a terminal illness.

Why Is Life Insurance Important?

All too often, final expenses include more than burial costs. With the average lifespan increasing, more and more people live out their final days in senior living facilities or hospitals. As a result, families are responsible for paying much more than the costs associated with the funeral.

Additionally, Life Insurance policies with higher death benefits allow your family to cover much more than final expenses in the event of your untimely or sudden passing. These policies also allow your family to replace your income, which could mean the difference between your loves ones remaining in the family house or being forced to move out. Without you around, they'll no longer have your income; but a Life Insurance policy can help them replace that cash flow.

Types Of Life Insurance Policies Available

There are different types of Life Insurance policies. Choosing which policy is best for your family depends on your current financial situation and your financial objectives.

Whole Life Insurance: Whole Life Insurance is a permanent policy, which means it lasts longer than term Life Insurance. This policy pays a death benefit, and it may build cash value while it's in effect.
Term Life Insurance: A Term Life Insurance policy is in effect for a predetermined period of time. Term Life Insurance policies allow families to purchase large death benefits on a budget.
Universal Life Insurance: Universal Life Insurance is a combination of Whole and Term Life Insurance. These policies build cash value like Whole Life Insurance policies, and they are budget-friendly like Term Life policies.

How A Divorce Impacts Life Insurance

Typically, your spouse or your children are the beneficiaries of your Life Insurance policy. When you go through a divorce, you may want to reconsider who's entitled to the death benefit of your policy. You can speak to your insurance agent about changing your beneficiaries to ensure your will is carried out in the event of your death.

Additionally, if your spouse has a Life Insurance policy, you may wish to create provisions to ensure your children remain beneficiaries of the policy. You should speak with your lawyer about including arrangements for Life Insurance in your divorce decree.

Purchasing a Life Insurance policy is a great way to ensure your children are able to sustain their existing lifestyle in the event of your death. Additionally, with a Life Insurance policy, you don't have to worry about losing a portion of the death benefit of your former spouse's Life Insurance policy following a divorce.

Need to make changes to your policy? Call Lancette Agency, LLC at (651) 264-1230 for more information on Minneapolis MN Life Insurance.

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