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What happens to my Life Insurance after Divorce?

If the honeymoon period is well and truly over, divorce might be looming on the horizon. But that can raise all sorts of tough financial questions, leaving you feeling overwhelmed and confused. To help you take control, here’s the lowdown on divorcing when you’ve got individual or joint life insurance policies.

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Is it better to cancel joint life insurance and start again?

Before you charge ahead and cancel your existing policy, have a proper think about the consequences. Any new policy will be based on your current circumstances — not how they were when you first took out a policy (even if you stay with the same insurer).

That’s likely to mean you’ll pay higher premiums (thanks to getting older) and in some cases, you might even need a health check. With that in mind, it’s worth having any new policies priced up before you hit cancel.

What happens if divorcing with mortgage life insurance?

Mortgage life insurance is designed to cover your outstanding loan if you die before it’s paid off. It’s also known as decreasing term life insurance.

As with other types of life insurance, one of you can either take over the policy or you can cancel it completely. The solution that’s right for you will depend on whether you’re selling the family home or if one partner will continue to live there.

If one of you decides to keep the policy, take the time to review existing terms and be clear about who your beneficiaries are.

Is divorcing a life changing event for insurance?

In the game of life, divorce is a big deal — not so when it comes to insurance. In fact, you don’t even need to tell your provider about your split.

Nevertheless, despite that, it’s good practice to tell your insurer about your divorce. Doing this will give you a chance to assess and amend your policy according to your new circumstances.

Is life insurance considered an asset in divorce?

The short answer is that it depends on the type of life insurance policy you have. If you and your (soon to be) ex have your own, separate policies, then no, life insurance is not counted as a marital asset.

The issue becomes a little trickier if you’ve got a joint life insurance policy. If this is the case, your policy can be considered a joint asset if you’ve contributed to it whilst you were married. In this instance, you’ll need to decide what to do with it.

Broadly speaking, you can do one of two things:

One person takes over the policy — this will have to be done legally with the new policyholder taking responsibility for all future premiums.
Cancel the policy — if you can’t decide who gets it, you can cancel the joint policy. If you have a whole of life policy and cash in, those funds will need to be split between you.

There’s also a third option but this won’t be available to everyone. If your joint life insurance policy has what’s called a ‘separation clause’ you can convert the policy into two separate plans. Not all joint policies have this clause but if yours is one of the lucky ones, it should be clearly set out within your policy documents.

Whatever route you go down, you should review the terms of your policy. In particular, check you’re still happy with the cover provided and who the beneficiary is — especially if it’s your ex and you don’t want them to benefit from your untimely demise.

Should I update my will along with my life insurance?

If you're updating your life insurance as part of a divorce, it’s certainly wise to reassess your will too.

If it’s a question of whether your ex will be able to claim part of an inheritance you’ve received, it depends on the circumstances you’re in. For example, if an inheritance has been claimed by both of you and is in your joint names, then it’s likely to be treated as a joint asset and divvied up according to your settlement.

We get it though — thinking about your own mortality is never nice. But when it comes to sharing out what you personally leave behind, nothing says it louder and clearer than a will.

Writing your will isn’t complicated and with the wonders of technology you can even arrange your will online. You can also make your intentions crystal clear with a deathwish. That way, there can be no ambiguity over what your money should be spent on, who gets it or how.

If you don’t have a deathwish but like the idea of one, take a look at some of our most popular deathwishes to help you decide where your money should go.

Is life insurance still valid after divorce?

The terms set out in your life insurance policy are very clear. The beneficiary named will be the person who receives the payout. If your current beneficiary is your ex then yes, they can inherit the compensation due from your insurance policy.

If it’s a question of whether your ex will be able to claim part of an inheritance you’ve received, it depends on the circumstances you’re in. For example, if an inheritance has been claimed by both of you and is in your joint names, then it’s likely to be treated as a joint asset and divvied up according to your settlement.

On the other hand, if one of you inherits money or assets after you decide to split, there’s a greater chance that it won’t be up for grabs.

You need to remember that if you and your ex can’t agree on who gets what, the courts will make those decisions for you. If that happens, the court will consider what makes a fair settlement based on existing assets and family circumstances (for example, whether you have children to support).

Dealing with life insurance after divorce

The good news is that there is life insurance after divorce and dealing with it doesn’t have to be difficult. Whether you decide to take over a joint policy or already have your own, the golden rule is to review levels of cover and named beneficiaries.

If you choose to go it alone and buy your very own life insurance, you can do that right here, right now. It’s simple, quick and best of all, you won’t need your entire divorce settlement to pay for it.

Why? Because life’s too short and we believe everyone should have access to flexible, affordable life insurance — it’s what makes us DeadHappy.

Does a divorce decree override a named beneficiary?

In a word, no. Life insurance pays out to whoever is named as the beneficiary. If that’s your ex and you don’t change your policy, they’ll receive the payout when you die.

Unfortunately, in some cases you might not be able to amend the beneficiary at all. For example, if the life insurance policy has been written in absolute trust.

I'm sold. But how do I get life insurance?

Life insurance can be complicated and costly. If that’s your thing, you’re in luck. A bunch of companies are only too eager to make you pay too much, spend too long form filling and perplex you into staying put. It’s easier for them that way. It’s enough to put you in an early grave.

Truth is, everyone needs unique life insurance. Based on who you are today and what you really want to happen when you die and a policy that can adapt to the twists and turns of life. That’s why we created DeadHappy. We’re nice, like that.

What you’ll notice is that we’ve create a life insurance that’s really easy and really quick to buy and likely, really cheap compared to your usual suspects. With just 4 questions you can probably get covered online in around 4 minutes.

We’ve also been rated 4.9 stars out of 5 on Trust Pilot. If you’re interested in reading more about what our customers have to say (they’re a fun bunch), why not hop over to our to our reviews page for a sneaky peek?

Looking for life insurance advice?

We’re not financial advisors, but we are regulated by the FCA. Our FCA status means that whilst we can’t advise you what to buy, or which insurance is right for you, we can give you as much information as possible to make your own decisions on which product may or may not be best for you. If you’ve any questions you can always chat to our Honchos, they’re here and happy to help.

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