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Divorce: Life Insurance
In some divorces, Life Insurance can be an important factor. In others, not so much.
Clients commonly ask questions about Life Insurance and in some circumstances, Life Insurance can be an important ingredient in the final settlement of the divorce.
Some people worry that they may be left unprotected in the event of a premature death (perhaps the other spouse is paying maintenance and/or child support) while some people resent having to pay for a policy that benefits to a former spouse.
The law offers no hard and fast rules on this issue. Courts do have the power to insist, in cases where income or wealth disparity is significant, that the dependent party have protection from a premature death, at least to the amount intended by the divorce decree regarding maintenance and child support. Courts consider the premium on such a policy a fair price to insure the financial security of the children and/or former spouse. In cases where income and wealth are balanced, the need for insurance is not an imperative and courts may be less inclined to require the policy.