There are many logistics Michigan residents must figure out when seeking a divorce. Some of them are obvious, such as splitting finances and determining child custody. Others can often go overlooked, such as life insurance.
Importance of life insurance
Life insurance ensures that children and surviving dependents will have financial security should the worst happen. It’s not uncommon for parents to have life insurance policies to provide financial security and stability for their children.
Individuals can receive life insurance as a benefit through their work. This means that each parent can have a life insurance policy that will support their children. Normally, the beneficiary will be your surviving spouse or the individual children themselves.
How does divorce impact life insurance
Your life insurance policy may not change after divorce. Your beneficiaries will remain your children, with your now ex-spouse serving as a beneficiary should you pass before your children are of legal age.
A judge can also order you to get life insurance in order to provide for your former spouse and children. Child support and alimony are often ordered to help provide for your ex-spouse and the children you have together. If you die suddenly without a life insurance policy, it may leave your family in a bad place financially.
How much life insurance to have
The amount of life insurance you need depends greatly on the needs of your children. Younger children will require a larger life insurance policy, so they can be financially secure through the age of 18.
As your children grow older, the need for a large life insurance policy decreases. You can negotiate terms where the life insurance is less after a certain period in order to reduce your payments.