Life insurance is one item that is often scrutinized after a divorce as a way to save money. Many people took out life insurance policies in order to provide for their spouse, should something happen to them. No spouse, no need for life insurance, right? Not necessarily.
First you need to talk with your attorney to determine if life insurance is or will be a requirement of our divorce decree. Sometimes life insurance is required as part of child support or spousal maintenance, to provide further support and protection. If you have a current policy you may be able to adjust the beneficiary to fulfill this need. You will need to know the face value of the policy and consider how much your premiums are per year.
Many life insurance policies are more than just insurance. It is common for policies to also function as an investment vehicle, growing in value. Talk with a local agent to get details on how your policy functions and whether it has this feature. It may make sense to continue the policy as part of your investment plan.
Many life insurance policies also have a cash value. Before you cash it in though, consider the face value of the policy, which is likely much greater than the cash value. The policy could be used to benefit your child, a future new spouse, or other family members.
Don’t forget that the original purpose of life insurance policies was to cover funeral and burial costs. This may be something you want to have a policy in place for so that family members are not burdened should something happen to you. If you do choose to keep a policy in place, be sure to change the beneficiary to the person of your choice so it is current.
When you have questions about life insurance and other assets in your divorce, the Sampair Group offers experienced advice in the Glendale, Mesa, Paradise Valley, Scottsdale and Phoenix areas of Arizona. Call us now to make an appointment.