When a couple gets divorced in Alabama, there are a lot of tough decisions that they need to make. Among them is the role life insurance can play after the split and how to deal with it. Take a look at some of the reasons you should fight for your marital life insurance policy during a divorce.
Why do you need life insurance in a divorce?
It can provide financial security for your children. If you have young children, life insurance can be a crucial way to make sure they are taken care of financially if something happens to you. If you are the primary breadwinner in your family, your spouse may not be able to cover all of the expenses on their own. In this case, life insurance can help ensure that your kids have the financial resources they need to thrive.
In addition, life insurance can help pay off debts and expenses. Life insurance can help pay off credit card debt, mortgages, car loans, etc. In Alabama, debts are treated just like other marital assets: They are subject to division. If you have life insurance, you can alleviate that burden if something happens to you during your divorce or after.
Life insurance can also be used for alimony payments. If the court orders you to pay alimony after divorce, they will typically require you to keep your ex-spouse’s name in your policy’s beneficiary list. The reason for this is to ensure that your ex still receives the money you owe them even if something happens to you.
What happens to life insurance in a divorce?
When signing up for a life insurance policy, you can name anyone as your beneficiary, meaning you can choose not to name your spouse. The question is whether they are entitled to get their cut of it during your divorce. The answer depends on two things. If you used your marital income, meaning any money you made while married, to pay premiums, then they would have a legal claim to the policy. But if you are using your inheritance money or funds from your separate property, the court can consider it only yours.
Life insurance is an essential asset for many individuals. If you or your spouse has a policy, it should be among the things you prioritize during a divorce.