Separation is often an emotionally challenging experience for couples and their loved ones, that can involve addressing various matters, such as how to manage your life insurance when separated. Financial questions can arise during this difficult time, so it’s natural to have concerns about how joint life insurance policies can be managed.
Speaking to one of our life insurance specialists to discuss life insurance when separated can help smooth out the process.
What happens to joint life insurance when separated?
Many couples hold joint life insurance policies, which are typically designed to cover both individuals under a single policy. Separation can complicate these arrangements, and understanding your options is essential for making informed decisions.
Joint life insurance policies are designed to cover two people, typically spouses, under one policy. In the event of a separation, the handling of such policies can vary based on several factors including the policy terms and the separation settlement agreement. Here are some common scenarios:
Policy Cancellation: One option is to cancel the joint policy altogether. This might be the case if both parties agree they no longer need the cover, or want to be insured on a policy with the other spouse.
Maintaining the Policy: Couples may decide to keep the joint life insurance policy even despite the divorce. This is more common with second-to-die policies, especially if other dependents benefit from the eventual death benefit. In this scenario, both parties would need to agree on how to handle premium payments and designate beneficiaries appropriately. If both parties have child dependents, they may decide maintaining the policy is the best way to proceed. However, the need for additional cover to protect new liabilities after divorce should also be considered.
Converting or Splitting the Policy: Some insurers offer the option to convert a joint life insurance policy into two individual policies. This can be a practical solution, allowing each person to maintain their own coverage independently. However, this process may come with additional costs and potential underwriting requirements.
What happens to single-policy life insurance when separated?
After separation, the terms and beneficiaries of a single life policy might need adjustments. If the ex-spouse is the beneficiary, policyholders may choose to update the beneficiary. Both parties may need to review and possibly modify their policies to ensure they align with their new financial and personal circumstances post-separation.
Can I remove my ex-spouse as a beneficiary from our joint life insurance policy?
Yes, you can typically remove your ex-spouse as a beneficiary from your joint life insurance policy, but the process can vary depending on the policy’s terms. It’s essential to review your policy documents and consult with us to discuss the specific steps required.
Considering individual insurance policies during separation
Considering individual life insurance policies during a separation is a crucial aspect that can significantly impact the financial security of both parties and their dependents. During the division of assets, it is essential to review and possibly adjust individual life insurance policies to ensure that they align with your new financial responsibilities and future needs.
Update your life insurance policy with us
After going through a separation, it’s crucial to update your joint life insurance policy to reflect your new circumstances. Contact our specialist advisors to discuss how cover can be adapted to meet your new needs.
Changing your life insurance policy during a separation can be complex, but we’re here to help. Our expert team offers personalised support in relation to life insurance when separated, beneficiaries and cover. We’ll guide you through the process at this difficult time and help you put in place plans for the future. Contact us today or complete our online enquiry form to learn more about how we can assist you.