Most couples going through divorce in Illinois realize they need to address asset division, spousal support, and issues regarding minor children. Not many understand the role life insurance plays as part of this process. It may seem strange that a court would require one or both parties to maintain or purchase a life insurance policy, but many judges will order it as part of a final divorce decree – or even while a case is still proceeding. Once you learn the reasons behind such an arrangement, you can see how life insurance impacts your rights as a party and parent.
You should always rely on your Chicago divorce lawyer for assistance with complicated legal concepts – especially where you might be required to provide life insurance. However, an overview should be helpful for understanding the basics.
Reasons a Divorce Court May Require Life Insurance
The Illinois divorce statutes on property and spousal support gives a judge the authority to order a party to maintain or purchase life insurance when he/she will incur financial obligations through the process. Typically, the court will make life insurance a requirement regarding:
Alimony: When the judge has determined spousal support is appropriate or the parties have agreed to alimony, the payor might be ordered to maintain an existing policy to pay upon death. In some cases, a judge can order the payor to cooperate with the other spouse in obtaining a policy that insures the life of the payor spouse. The proceeds are a replacement for what the recipient spouse would have received if the payor had lived.
Child Support:
A life insurance requirement works in the same way for child support obligations, allowing the children to still have a source of funds for the same needs that child support would cover. Note that proceeds may be managed by the other parent or a guardian, a trustee, or some other person.
College Costs: Closely tied to child support is educational costs, to which both parents might be ordered to contribute. With a life insurance policy, if one parent dies, the child will still have financial means to attend college or other institution.
Factors to Consider for Life Insurance in Divorce
In a basic policy, the insurance company will pay out to designated beneficiaries when the insured dies. As such, both parties must work closely with their lawyers to determine:
- The amount – based upon how long the spousal or child support obligation will last;
- The type of policy – such as term, whole life, universal, or others;
- Who is the owner of the policy;
- Who pays the premiums, since non-payment could lead to termination of the policy;
- The beneficiaries; and,
- How much of the proceeds will go to each beneficiary.
Discuss Life Insurance Requirements with a Chicago Divorce Lawyer
If you are contemplating divorce, it is important to retain skilled legal representation to advise you on the role of life insurance to secure spousal or child support obligations. Whether the court is requiring you to purchase a policy or if you may be a beneficiary – you need to fully understand your rights. For more information, please contact Michael C. Craven today. You can schedule a consultation at our Chicago, IL offices by calling (312) 621-5234 or visiting our website.
