Tricky financial questions can crop up even during the most amicable divorce, and existing life insurance is often something a separating couple will need to put under review.
What’s the best thing to do with your life insurance policy after divorce? There’s no one-size-fits-all solution, but we’ll run through some of the options available here.
What should you do if you have separate life insurance policies?
Having two individual life insurance policies should make things a little simpler in the event of a divorce. However, you should check to make sure the policies still provide the cover you require under your changed circumstances. You might also want to change the person who is legally entitled to benefit if it’s currently your ex-partner.
What should you do with joint life insurance after divorce?
If you have joint life insurance with us, you can cancel the policy and take out a new single life policy suited to your changed situation. You might want to check your new policy is in place before cancelling any existing cover.
Any new policy will be subject to the terms and conditions available to you at the time you make the change.
What should you do if you have mortgage life insurance?
If your life insurance provides cover for a joint mortgage, then the person who gets the house will also either need to take over the existing life insurance policy or take out a new one. In either case, they may want to re-look at the existing cover to make sure it still provides enough to pay off the mortgage if they pass away during the length of the policy. It is also a good time to review who is legally entitled to benefit from the policy to make sure the mortgage is repaid in the event of a claim.
Don’t forget to update your will
While reassessing your life insurance after divorce, it’s also worth taking the opportunity to update your will. If you haven’t made a will at all, your money and possessions will be passed on according to the rules of intestacy, which may not reflect your wishes.