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How Is Life Insurance Handled in Divorce?

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BLOG DM 5 Ways to teach your kids to be gratefulLife insurance is used to protect loved ones from the financial ramifications of lost income in the event that a family member passes away. In many life insurance policies, a person will name their spouse as the primary beneficiary, but when the marriage goes south, figuring out what to do with the life insurance policy is very important, and often overlooked in lieu of other divorce considerations such as spousal support and division of property.

After divorce, in all likelihood you will not want your life insurance benefits passed to your ex-spouse, unless you have children; often, if the divorcing spouses have children and a life insurance policy, the parties will agree (or a court may order) that the other parent will be the beneficiary of the policy until the children reach the age of majority.

Fortunately, if you do decide to change beneficiaries, most life insurance policies are revocable, meaning that you are able to, at any time, change who your beneficiary will be. You can do this by contacting your life insurance agent, who can verify that the policy is revocable and help you through the process of changing your beneficiary.

Is Life Insurance Marital Property?

To determine whether your life insurance is considered separate or marital property, you have to figure out what type of life insurance policy you have, as well as whether your state is a common law or community property state. Colorado is a community property state.

In community property states, the type of property your policy usually depends on when you acquired the policy and how you paid for the premiums. If you acquire your policy prior to marriage and pay into it using funds separate from marital assets, then usually it is considered separate property. If you acquire the policy during the marriage and pay into it using community funds, it is typically considered community property subject to equitable division.

Contact the Highlands Ranch Alimony Lawyers at Divorce Matters Today

The attorneys at Divorce Matters handle cases relating to family law in the greater Denver area and throughout Colorado.

After divorce, in all likelihood you will not want your life insurance benefits passed to your ex-spouse, unless you have children; often, if the divorcing spouses have children and a life insurance policy, the parties will agree (or a court may order) that the other parent will be the beneficiary of the policy until the children reach the age of majority.

 Fortunately, if you do decide to change beneficiaries, most life insurance policies are revocable, meaning that you are able to, at any time, change who your beneficiary will be. You can do this by contacting your life insurance agent, who can verify that the policy is revocable and help you through the process of changing your beneficiary.