Life Insurance and Divorce Settlements
The process of divorce particularly the property settlement issues that go with it could get further complicated especially if you do not fully understand its impact on your life insurance. In Australia, just like in other countries, divorce settlement process could involve performance of stock takes of married couple’s properties and other assets. Usually, the issue about life insurance policies is overlooked. It is advisable to include the policy in your settlement concerns.
There are two types of policies that are considered during the process of property settlement in divorce. They are the money-back term policies and the term life insurance policies. Each type could be handled and managed differently during the complicated process of legal separation.
A money-back term life insurance policy could easily get complicated and confusing. That is because the surrender value would be taken into account. It would be made a significant part of calculations involving divorce settlements.
The term life policy is the more common between the two types. There would be no surrender value accounted for. However, during the process of divorce, it would be ideal to review the terms of the policy, especially the owner of the policy as it could be jointly owned or individually owned. Names of beneficiaries must also be reviewed especially if there would be revisions following the divorce process.
Overall, there is a need to review life insurance policies prior to any application for divorce. Be warned that there could be various unwanted implications to both parties especially if the issue has not been handled properly.