With so many phone calls and paperwork involved with getting divorced, your life insurance policy might not be at the forefront of your mind – but it’s something you should get around to looking at.
Can you split a joint policy into two, and how can you change who receives the payout? There are many important factors to consider.
This guide aims to answer all the common questions about life insurance after a divorce.
What happens to life insurance after divorce?
Nothing will automatically happen to your life insurance policy after a divorce, you’ll need to contact your insurer to make the necessary changes.
The changes you’ll need to make will depend on the type of policy you took out and who you named as the beneficiary of the policy (who receives the payout).
Joint life insurance
If you have a joint life insurance policy with your ex, you could split the policy into two if allowed by your insurer. Not all insurers will allow you to split your policy, meaning you might have to cancel your policy.
Separate policies
If you and your ex have separate policies, you may need to change the beneficiary of your policy if you originally named your ex.
Find out exactly what you need to do to change your life insurance policy with our handy guide.
What happens to a joint life insurance policy after divorce?
If you have a joint life insurance policy with a partner and you divorce or separate, you have a few options:
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Cancel the policy: You could cancel your life insurance policy and start fresh with a new one that meets your new circumstances.
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One partner takes over the policy: It could be possible for one partner to take over the joint life insurance policy themselves.
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The policy is split into two: if your policy includes a separation benefit, then you could split your policy into two separate policies for you and your ex.
It's a good idea to reach out to your specific insurer to find out what your options are.
What happens to a single life insurance policy after divorce?
If you and your ex-partner both had single policies, you should be able to keep these without them being affected by your divorce.
The only change you may want to make is changing the beneficiary of the policy so that your ex won’t get the payout.
Alternatively, if you still want them to receive the payout (for example, to help take care of your kids if you were no longer around to help financially), then you can keep the policy exactly as it is.
How to split life insurance after a divorce
Some joint life insurance policies come with what’s known as a ‘separation benefit’ or ‘separation agreement’.
Having this included in your policy means it’s possible to split it into two separate life insurance policies so that you and your ex-partner are no longer sharing a policy.
What is the separation benefit and how does it work?
A separation benefit or separation agreement is an additional extra that can be included with some life insurance policies at no extra cost.
It means that if you take out a joint life insurance policy and then get divorced or separate from your partner, you can split the policy into two separate policies.
What insurers offer the separation benefit?
Not all insurers include separation benefits with their policies. You can check your policy documents or contact your insurer to find out if your policy includes a separation agreement.
What happens if the policy was written in trust?
If your life insurance policy was written in trust, there could be some complications.
Depending on the type of trust your policy was written in, it might not be possible to change the beneficiary of the policy.
If your policy is written in an ‘absolute trust’, you won’t be able to change your beneficiary. If the policy is written in a flexible or discretionary trust, you should be able to change who benefits from your policy.
If you look through your documents, you should be able to find out what type of trust your policy is written in. Alternatively, you can contact your insurer.
Should I tell my insurance company that I’m getting divorced?
Should I tell my insurance company that I’m getting divorced?
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