Life Insurance and Divorce: What Happens to Your Policy?

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Divorce is a difficult and emotional process, and it can have significant financial implications. One aspect that often gets overlooked is the impact on life insurance policies. In this article, we will explore what happens to your life insurance policy when you go through a divorce.

Understanding Life Insurance

Before we dive into the specifics of life insurance and divorce, let’s first understand what life insurance is. Life insurance is a contract between an individual and an insurance company. The individual pays regular premiums, and in return, the insurance company provides a death benefit to the designated beneficiaries upon the insured person’s death.

Types of Life Insurance Policies

There are several types of life insurance policies, including term life insurance, whole life insurance, and universal life insurance. Each type has its own features and benefits.

  1. Term Life Insurance: This type of policy provides coverage for a specific term, such as 10, 20, or 30 years. If the insured person dies during the term, the beneficiaries receive the death benefit. If the term expires and the insured person is still alive, the coverage ends.
  2. Whole Life Insurance: Whole life insurance is a permanent policy that provides coverage for the entire lifetime of the insured person. It also includes a cash value component that grows over time.
  3. Universal Life Insurance: Universal life insurance is another type of permanent policy that offers more flexibility in terms of premiums and death benefits. It also includes a cash value component.

Life Insurance and Divorce

When you get divorced, the division of assets and liabilities includes life insurance policies. Here’s what you need to know:

  1. Ownership: If you own a life insurance policy, it is considered an asset and may be included in the division of property. The value of the policy will depend on the cash value, if any, and the death benefit.
  2. Beneficiaries: During the divorce process, it’s important to review and update your beneficiaries. You may want to remove your ex-spouse as a beneficiary and designate someone else, such as a child or a family member.
  3. Obligations: If you have a joint life insurance policy with your spouse, you will need to decide how to handle it. You may choose to continue the policy, transfer ownership to one spouse, or surrender the policy and purchase separate policies.
  4. Child Support and Alimony: Life insurance can also play a role in child support and alimony agreements. The court may require the paying spouse to maintain a life insurance policy with the ex-spouse or children as beneficiaries, ensuring financial support in case of the paying spouse’s death.


Divorce can have a significant impact on your life insurance policies. It’s important to review and update your policies during the divorce process to ensure that they align with your new circumstances. Consult with a financial advisor or an attorney specializing in divorce to navigate the complexities of life insurance and divorce.

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