Divorces entail so many details. There is asset division to contend with. If there are children involved, there is child support and custody to deal with. You also have to worry about finances and living arrangements.
There’s another thing that might be involved in your divorce that you may not have thought of: life insurance. The court may order life insurance in certain situations, particularly when there are obligations involved, such as child support and alimony. But why?
Child support and alimony are ordered to help financially support children and ex-spouses, respectively. If the payor parent or spouse dies while under a support order, then that would be the end of the payments. This could create a severe financial hardship for the recipients.
However, if there is life insurance, then there would be money available if the payor dies. The children or ex-spouse could be listed as beneficiaries and they would receive the money in the event of the payor’s death.
Before you purchase life insurance, though, there are a few issues to consider. You cannot calculate the amount of life insurance you will need simply based on the monthly payments. You have to consider that unexpected expenses may occur. Remember to factor in medical expenses, child care, expensive hobbies and extracurricular activities and college plans. The age of the child is also a consideration. A toddler will require more life insurance than a high schooler. As such, you may be able to decrease the amount of life insurance your child needs as he or she gets older. Typically, minors cannot be listed as beneficiaries, so make sure to use the correct designation to avoid hassles.
Ex-spouses can benefit from life insurance as well. To determine the amount you will need, consider how long you need to pay alimony. If you are obligated to pay $20,000 a year for five years, the total will be $100,000. However, if you were to die after the first year, that would leave your ex-spouse with a lot of money. Therefore, you should have an advisor give you an accurate calculation of how much life insurance you truly need.
You also need to consider your age and health. If you are older or suffering from chronic medical conditions, then buying life insurance may be costly. The judge will determine if buying life insurance would be too burdensome. In exchange, you may be able to offer other assets or set up an annuity or other plan that would dole out money as needed.
There are so many details you need to think about in a divorce. In some cases, life insurance is required to help with obligations such as alimony and child support.
The Columbia divorce lawyers at the Law Offices of Todd K. Mohink, P.A. understands all the details involved in a divorce. Let us help you with the process. Schedule a consultation by filling out the online form or calling (410) 774-5987. We have two offices to serve you.
7310 Ritchie Highway, Suite 910
Glen Burnie, MD 21061
30 Corporate Center
10440 Little Patuxent Parkway,
Columbia, MD 21044