5 Ways Life Insurance Eases Post-Divorce Estate Planning – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Top Stories
Topics
    • Life Insurance News
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Articles
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
Sign in or register to be an INNsider.
  • Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
  • Insider Pro
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
INN Daily Newsletter INN Exclusives
Top Stories RSS Get our newsletter
Order Prints
November 5, 2019 Top Stories No comments
Share
Share
Tweet
Email

5 Ways Life Insurance Eases Post-Divorce Estate Planning

InsuranceNewsNet

By Trey Reynolds

With nearly half of all marriages ending in divorce, it’s not uncommon to have clients who are either going through divorce proceedings, living as a single parent after a divorce, or have been married more than once – with or without stepchildren.

Divorce is emotionally draining, and on top of that, the challenges divorce brings to estate planning can be an added stress. In many cases, one often overlooked tactic can provide tangible solutions for divorcees and blended families: life insurance.

Related stories

  • Five Minutes With A Medicare Expert: Trends To Watch For In 2022
  • Prudential Scores Winning 2Q With FlexGuard

By using life insurance to address some of these issues head-on, you can help your clients develop an estate plan that truly fits their needs, goals and unique family circumstances.

Here are five ways life insurance can help your clients in the event of a divorce:

  1. Provide funds for divorce-related expenses. If the divorce is contested or includes child custody issues, the proceedings can stretch from months to years, with attorney’s fees reaching into the tens of thousands of dollars. Clients with an established permanent life insurance policy can take withdrawals or loans from the policy’s cash value to help pay needed expenses. If the policy is designed effectively, your clients won’t have to liquidate other assets. or pull money from an estate that would have gone to beneficiaries.
  2. Protect the client’s income post-divorce. A client’s income can change dramatically as the result of a divorce, especially if one spouse was a stay-at-home parent. They may receive alimony payments to help make up the difference. But if the payor passes away unexpectedly, the lost income can cause a considerable amount of stress and financial hardship for those left behind. Permanent life insurance on the life of the paying spouse can help provide coverage and replace income lost if they die.
  3. Preserve the client’s estate post-divorce. Life insurance can also provide funds to pay off any existing debt held by the deceased spouse, which can eliminate the need to liquidate other assets from the estate that would have gone to the surviving spouse or other heirs. By taking withdrawals or loans from the policy – tax-free, if the policy is set up correctly – your clients can effectively plan their legacy, even if their ex-spouse hasn’t been entirely financially responsible.
  4. Ensure that children receive a fair inheritance. If your clients have children from a previous marriage, it may make sense to provide for them through life insurance, instead of passing their assets to a new spouse first. Or your client may choose to provide for the new spouse through life insurance and leave the estate to the kids outright or in a trust. Either way, splitting up the way in which your clients leave assets to biological children and a new spouse in a blended family can relieve a lot of stress and bad feelings. This is especially true if the new spouse has children of their own.
  5. Help fund college or other expenses for the children. By protecting the lives of both parents with permanent life insurance, your clients can ensure that the expenses for the children are taken care of. For example, if the former spouse is responsible for paying medical expenses, college expenses or other costs for the children, a life insurance benefit can provide essential funds if that spouse passes away. Permanent life insurance with cash value can also provide funds during the insured spouse’s lifetime, if cash is not readily available, to pay tuition while the children are in college or help adult children repay student loans.

 

As you work with clients to create a customized policy that works for them in the event of a divorce, there are a few other factors to consider. For one, consider permanent instead of term insurance. While term insurance may be less expensive, permanent insurance has the potential to accumulate cash value that can be drawn from the policy while the spouse is still alive, in addition to providing a death benefit.

You also may want to consider adding riders to customize your client’s policy. With a permanent life insurance policy and a long-term care rider, they have the flexibility to accelerate the policy’s benefit while they’re alive to pay for long-term care costs such as care in their home or a nursing home – helping alleviate any concern for divorcees about who will take care of them if they can’t take care of themselves.

Because divorce is so common these days, you may want to help your clients plan their estates with extra protections in mind. A carefully designed permanent life insurance policy can help your clients protect themselves, their income and their estate throughout their lifetime, even if they go through a divorce. Not only does permanent life insurance provide tax-efficient cash value growth and distributions, it can also be used to replace lost income, alimony or child support, pay for college or medical expenses for the children, or long-term care costs for the divorcee.

Trey Reynolds is head of life distribution for AXA Equitable. Trey may be contacted at [email protected].  

© Entire contents copyright 2019 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

Older

NAIC Urged To Do Full Review Of Illustrations; Regulators Demur

Newer

IRI, ACLI, Company CEOs Urge Senate Leaders To Take Up SECURE Act

Advisor News

  • Jury finds Lexington investment advisor, guilty of charges related to fraud
  • Chicago investment advisor indicted for allegedly swindling clients out of $683,000
  • Will the family maximum limit my Social Security benefits?
  • South Florida resort sold for $835M, biggest deal for a U.S. hotel since pandemic started
  • Passage of the Secure Act 2.0 brings retirement crisis into focus
More Advisor News

Annuity News

  • $747 million Powerball jackpot still up for grabs
  • Study: Does pessimism really suppress annuity sales?
  • Sweet streams of income: ChatGPT, the bard of annuities
  • F&G Annuities & Life announces equity investment in life IMO SYNCIS
  • Investors scrambling to lock in rates propel annuity sales to record highs
Sponsor
More Annuity News

Health/Employee Benefits News

  • Florida looks to double amount of medical-marijuana licenses
  • Bipartisan group of Missouri lawmakers look to extend healthcare coverage for new moms
  • Medicaid extension for new moms advances amid abortion discussion
  • Medicaid's pandemic benefits are ending
  • Congress has capped Medicare insulin costs. Here’s how it works and what it means
More Health/Employee Benefits News

Life Insurance News

  • In Murdaugh murder trial, the path to conviction remains unclear
  • Libby Murdaugh's caretaker saw Alex night of murders for '20 minutes', but he said '30 to 40'
  • SC judge in Murdaugh murder trial allows jury to hear alleged financial crime motive
  • How the cases in Alex Murdaugh's murder trial are shaping up
  • Testimony: Maggie Murdaugh may have bought gun that killed her
More Life Insurance News

- Presented By -

Top Read Stories

  • Pennsylvania woman sentenced in elderly fraud case
  • NY man sentenced for operating a Ponzi scheme, stole more than $1M
  • A life lesson in success — with John Wheeler
  • For agents and advisors, dispelling LTCI myths is crucial to building sales
  • Fed slows interest rate increases; more hikes expected
More Top Read Stories >

FEATURED OFFERS

Meet Encova Life
We know agents matter. You can count on our life team to be high tech, high touch and responsive.

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Articles
  • Monthly Focus

Top Sections

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2023 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.