When you are getting a divorce, your life insurance policy is probably not one of the first things you are going to think of. However, it is important to know how your policy will be affected once you and your spouse split. A Tazewell County marital property division lawyer can tell you more about what could happen and which kinds of life insurance could be divided during a divorce.
What if I Have Term Life Insurance?
Term life insurance can make things a bit less complicated. This type of coverage only lasts for a certain amount of time. You pay into it and a death benefit will pay out only if you pass away during a certain timeframe, often between 10 and 30 years.
Because such a policy only pays out when you pass away, it technically has no cash value while you are alive. This means that it is unlikely to be seen as a marriage asset. So there is no need to split it up or try to divide it evenly for everyone.
Who Becomes the Beneficiary of My Policy?
Many people make their spouses the beneficiary of their life insurance policy. After a divorce, most people want to change that. Fortunately, Illinois law requires a spouse to be removed as a beneficiary from a life insurance policy when divorce proceedings begin.
In some situations, they can become the beneficiary again. This is common in cases with dependent children. The ex-spouse gets the payout, but it is meant to provide for the children once you are gone.
If you have another beneficiary for your life insurance in mind, you can set a different person to receive the benefits if you were to pass away. You can set one of your adult children, a friend, or whoever else now that your ex-spouse has been taken off of the policy.
What About Whole Life Insurance?
What can complicate divorce agreements is a whole life insurance policy. When you purchase a term life policy, there is a possibility that it will not pay off. If you do not pass away in a certain timeframe, no one receives benefits.
This is not the case with a whole life policy. This type of policy does not expire and since you are going to pass away at some point, there is an actual monetary value that can be attached to it.
Sometimes the holder of a whole life insurance policy can cash in their policy, splitting its current cash value with their ex. Sometimes they can keep the policy, but other assets are distributed differently due to the value of the benefits. It can all depend on what kinds of deals are cut and what judgments are made.
Contact a Marital Property Attorney
If you want to learn more about how your assets can be divided in a divorce, contact Butler, Giraudo & Meister, P.C. We can help you fight for a fair divorce agreement and answer any questions that you have about how your life insurance can be affected.