It is common for a divorce decree or Marital Settlement Agreement to require a providing spouse maintain a life insurance policy on his/her life during the period spousal and child support payments are being made. This is called Life Insurance as Security for Support. Spousal Support terminates at the death of either party. Life Insurance can protect the supported party in the event the support payor were to pass away un-expectedly.
What type of insurance should be used?
- The shorter the obligation the more likely some form of term insurance will be advisable. Longer time frames may call for some form of permanent life insurance. When lifetime alimony payments are required, permanent insurance will be preferred.
How can the recipient spouse be assured the life insurance policy is placed and remains in force?
- The ideal policy would be fully paid but is not likely to be financially viable. The next best option is to require annual premium payments necessitating one check per year rather than 12 and limiting the logistic problems. The recipient spouse should be the owner of the policy meaning they will be notified if a premium payment is missed before the policy lapses