Four Things You Should Know About Life Insurance and Divorce
August 14, 2019 by Chad G. Boonswang, Esq.
As a couple, you’ve purchased life insurance as part of your comprehensive financial plan. Sadly, you and your spouse have decided to part ways. Over the years our firm has found that clients needed to be apprised of the following considerations when a divorcing couple has life insurance:
1. A Life Insurance Policy May Be a Marital Asset
Whether a life insurance policy is a marital asset depends upon whether the policy is a “Whole Life” policy or a “Term Life” policy.
Whole Life policies
Whole Life policies have cash value and are considered part of your net worth. You must list a whole life policy as a marital asset to be divided as part of the divorce proceedings. Most commonly the policy is simply cashed out and divided equally. “Universal Life” policies are similar, being a hybrid of whole life and term and often having a flexible premium option.
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