Life Insurance and Divorce: What Happens to Your Policy?

Why Life Insurance Matters During and After Divorce

Life insurance is a financial safety net. During a marriage, it’s often used to protect a spouse or children in the event of an untimely death. After divorce, that financial protection may still be necessary—especially when kids, alimony, or shared debts are involved.

Here’s why life insurance often becomes part of the divorce conversation:

• It ensures child support or alimony payments continue if the payer passes away

• It protects co-signed debts or shared financial responsibilities

• It allows the custodial parent to support the children if the other parent dies

• It may already exist and needs to be updated to reflect new priorities

Do You Need to Keep Life Insurance After Divorce?

That depends on your situation. Ask yourself:

• Do I have minor children who rely on me financially?

• Do I owe child support or alimony?

• Am I co-signing a mortgage or debt with my ex?

• Did my divorce agreement include a life insurance requirement?

If the answer to any of these is yes, keeping or updating a policy is likely a smart move.

What Happens to an Existing Policy?

If you already had life insurance during the marriage, here’s what can happen during or after divorce:

You Own the Policy on Yourself

You can usually:

• Change the beneficiary to someone else (unless restricted by a court order)

• Adjust the coverage amount if your financial responsibilities have changed

• Transfer ownership to your ex (if required by divorce terms)

Your Ex Owns the Policy on You

If your ex is the policy owner, they control the beneficiary designation and payments. This setup is sometimes required in legal agreements to ensure ongoing protection for kids or alimony recipients.

You Own a Policy on Your Ex

If you’re financially dependent on your ex (for example, they’re paying child support), it may make sense to keep this policy. If you’re the policy owner and pay the premiums, you control the beneficiary designation and can ensure your children are protected.

Court-Ordered Life Insurance Requirements

It’s common for divorce settlements to include life insurance clauses. A judge may require one or both parties to:

• Maintain a minimum amount of coverage

• Name the ex-spouse or children as beneficiaries

• Provide proof of coverage annually

• Keep the policy in force until children reach adulthood or support obligations end

If you’ve been ordered to maintain life insurance, don’t delay—failure to comply could lead to legal or financial consequences.

How to Change a Life Insurance Beneficiary After Divorce

If you’re the policyholder and want to change your beneficiary after divorce:

1. Contact your insurer and request a beneficiary change form

2. Fill it out carefully with the new beneficiary’s full legal name

3. Submit the form and confirm the change in writing

Important: If your divorce agreement says you must name your ex or child as the beneficiary, don’t change it without legal guidance.

Should You Remove Your Ex as a Beneficiary?

It depends on your goals and obligations:

• If you have no legal requirement to keep them listed, and there’s no longer a financial dependency, it’s often appropriate to update your beneficiary to someone else (such as a child, sibling, or new partner).

• If your ex relies on your support—or your children’s well-being depends on them—keeping them as a beneficiary might still make sense.

You can also name a trust or custodian to manage funds for minor children, which helps avoid giving a large sum directly to your ex.

Buying a New Policy After Divorce

If you’re starting fresh after divorce, you may want to purchase a new life insurance policy that reflects your new financial responsibilities.

Consider:

• A term life policy to cover child support, debt, or other short-term obligations

• A permanent policy if you want to leave a long-term legacy or provide for adult children

• Naming trusts or alternate guardians if you want more control over how the payout is used

Don’t forget to compare rates and shop around, especially if your health or income has changed since your last policy.

Protecting Your Children

Many divorced parents use life insurance to ensure their children’s future is protected. To do this:

• Name your child (or a trust) as the beneficiary, not your ex-spouse

• Consider appointing a custodian under the Uniform Transfers to Minors Act (UTMA)

• Set up a life insurance trust to manage how and when the payout is used

This gives you more control and peace of mind, knowing the money is being used in the best interest of your child.

When to Review and Update Your Policy

Review your life insurance:

• Immediately after divorce

• When your children reach adulthood

• If your financial situation changes

• Before remarrying or having more children

It’s also a good idea to review your beneficiaries yearly to make sure your policy still aligns with your wishes.

Final Thoughts

Divorce changes your family—and your financial future. But it doesn’t have to leave your loved ones unprotected. By reviewing your existing life insurance, understanding your legal obligations, and making smart updates, you can ensure that your policy continues to support the people who rely on you most. Whether you’re keeping a current plan or starting fresh, a well-thought-out life insurance strategy can bring clarity, compliance, and peace of mind in your new chapter.