Divorce isn’t just about dividing assets and determining custody. One often-overlooked issue is life insurance—and it can have a major impact on your financial future. Whether you’re paying or receiving alimony or child support, life insurance may be required to secure those obligations and provide peace of mind for your family.
In this blog, we’ll break down everything you need to know about life insurance and divorce in Maryland, including why it matters, how courts handle it, and what steps you should take to protect yourself.
Why Life Insurance Matters in Divorce
Life insurance is often used as a financial safety net. During a divorce, it plays a crucial role in ensuring that support obligations are met, even in the event of an untimely death.
For example:
-
If your ex-spouse is ordered to pay child support, a life insurance policy can guarantee that your children remain financially supported if something happens to them.
-
If alimony is awarded, life insurance can secure those payments for the duration of the support order.
Without life insurance in place, a sudden death could leave a surviving spouse or children financially vulnerable.
Is Life Insurance Required in a Maryland Divorce?
In Maryland, courts have the authority to order one spouse to maintain a life insurance policy for the benefit of the other spouse or their children. This is especially common when one spouse has a significant financial obligation, such as child support or alimony.
The court will typically consider:
-
The amount of support being paid.
-
The length of time support will be required.
-
The availability and cost of life insurance coverage.
The goal is to ensure that the financial security of the family continues, no matter what happens in the future.
Who Should Be the Beneficiary?
Beneficiary designation is one of the most important aspects of life insurance and divorce. The court may require that:
-
A child or children be named as beneficiaries.
-
A trust be set up to manage the funds for children until they reach adulthood.
-
A former spouse be named as the beneficiary for as long as support obligations exist.
It’s also important to review and update your beneficiary designations after divorce. Many people forget to remove their ex-spouse from policies when no court order requires it, leading to unintended consequences.
What If My Ex-Spouse Lets the Policy Lapse?
If your ex is ordered by the court to maintain life insurance but fails to pay the premiums, they could face serious legal consequences. You may also be able to request proof of the policy’s status as part of the divorce settlement or custody agreement.
Proactive monitoring is essential—don’t assume the policy will remain in place without follow-up.
Practical Tips for Handling Life Insurance in Divorce
Here are a few key steps to protect yourself and your family:
-
Ask early in the process about life insurance requirements in your case.
-
Get the details in writing in your settlement agreement or court order.
-
Confirm coverage by requesting policy documents from your ex-spouse or their insurer.
-
Update your own policies to reflect your new circumstances, especially beneficiaries.
-
Consider a trust if children are named beneficiaries, so funds are managed responsibly.
Conclusion: Protecting Your Family’s Future
Life insurance may not be the first thing that comes to mind during divorce, but it’s a critical tool for ensuring long-term financial security. Whether you’re the paying or receiving spouse, understanding your rights and obligations regarding life insurance can give you peace of mind and protect your family’s future.
If you’re navigating divorce and need guidance on how life insurance may affect your case, Jacobson Family Law is here to help. Schedule a consultation today at jacobsonfamilylaw.com/contact.
For more expert insights, listen to the Divorce Diaries: Lessons from the Trenches podcast at jacobsonfamilylaw.com/podcasts.
