Break-ups are a fact of life, (42%)
It’s an unfortunate fact of life that marriages often break-up. According to the Office For National Statistics (ONS) 2016, 42% of marriages in the UK end in divorce.
“There were 106,959 divorces of opposite-sex couples in 2016, an increase of 5.8% compared with 2015.”
The most common reason cited for divorce, among both men and women, since 1970 is ‘unreasonable behaviour’.
What with dividing up assets, looking for a new place to live, concerns about your finances and worrying about the children – it is easy to overlook your life insurance after a divorce.
However, keeping your life insurance in order is vital if you are to continue to protect your assets and most importantly the future security of your children.
Joint, single or no policy?
If you have gone or are going through a divorce, you will probably fall into 1 of 3 life insurance scenarios.
1) You and your ex-spouse share a joint policy
In this scenario, you could both continue the joint policy after the divorce and keep the cover going until the term expires. This may be the cheapest option, although not always feasible.
Alternatively, either of you could cancel the joint policy, with a view to taking out new single policies to provide protection.
2) You and your ex-spouse have separate policies
If you both have your own individual policies, then it could be that little needs to change, as the policy could just continue.
However, you will probably want to check that the policy still meets your needs. You may also want to change the named beneficiaries, (as it is likely to be your ex-spouse).
3) Only one of you has life cover
It could be that only one of you has life insurance, perhaps just the ‘breadwinner’ of the family. If this is the case and you don’t have cover you might want to look into getting life insurance now that you are single.
It is highly likely that after the divorce, one party will leave the family home, perhaps to take out a mortgage on a new place, taking the life policy with them. Potentially leaving the family home exposed.
A policy to meet your changing circumstances
Whichever scenario best describes your situation, there are likely to be questions you will need to answer:
- Does the policy still meet your needs post break-up?
- Do you need to change the cover amount?
- Do you need to change the named beneficiaries?
- Does the policy term need to be extended?
- How much can you afford each month?
If you are taking out a new policy, it’s likely that because you are now older, you will pay more for your premiums. So it’s best to arrange cover as soon as possible.
In order to secure the best deals, you should shop around to compare multiple quotes or use the services of a broker to do this on your behalf.
What if your life insurance is written in trust?
This one could be tricky, depending on the type of trust you have written your policy into.
If written into an absolute trust it is very unlikely you can change the details, such as the named beneficiaries.
However, if you have a flexible or discretionary trust you should be able to make the required changes, post-divorce.
Do not leave your dependants exposed
Regardless of whether your break-up is amicable or acrimonious, you have 1 or 4 children, it is really important not to leave your loved ones unprotected.
Whatever your situation you don’t want to burden your dependants with debt, or have your ex-spouse struggling to meet living costs or mortgage repayments.
If you do have children then you and your ex-spouse will most likely still share a joint responsibility to make sure their future is financially secure.
It’s a case of working out which life insurance policy best meets your changing circumstances.
Need help finding a new life insurance policy at the right price? Let Reassured help you compare multiple quotes.