Q & A

In-Depth Explorations of Family Law
For Our Readers by RRBF&B

The Role of Life Insurance in Divorce

Life insurance can factor into a divorce case in Connecticut in several ways. If either you or your spouse or both of you hold a life insurance policy, here is what you need to know.

Can I make changes to my life insurance policy while my divorce is pending in Connecticut?

Once a divorce case is started, the Automatic Orders go into place. One of the provisions of the Automatic Orders is that any life insurance policies that either party has in place must be kept in place and in good standing through the pendency of the divorce. This applies whether you hold a term life policy, which provides a death benefit if the policyholder dies during the policy’s coverage period, or a whole life policy, which provides a death benefit over the course of the policyholder’s lifetime and has a cash surrender value that grows over time.  

During a divorce action in Connecticut, you cannot change the policy’s death benefit, the beneficiary, or cancel the policy without written consent of the other party or permission from the Connecticut family court. The purpose of the Automatic Orders are to maintain the status quo and to act as a safeguard while the divorce is pending. 

Under what circumstances might the other party agree to a change in the life insurance policy?

We see this on occasion, particularly with whole life policies. Because of the added benefits, whole life insurance is generally more expensive than term life, and the whole life insurance premiums may become more expensive than the parties can or want to pay during the divorce process. The parties may agree to cash out the policy or otherwise make modifications because they need the cash flow during the divorce process. 

If the parties do not agree to change the life insurance policy, a party may file a motion with the Connecticut family court to ask to be able to change the policy.

Is life insurance considered an asset for division of property purposes?

Yes, a whole life policy, which has a cash value and is often used as an investment vehicle, is considered property under Connecticut law. The family court has equitable discretion as to how it distributes property, inclusive of a whole life insurance policy, as part of a divorce.

How else can a life insurance policy factor into a divorce?

Life insurance can be used to secure future financial obligations, such as child support, alimony, or a future property settlement payment. Life insurance is used as security because a party required to make support payments could die before fulfilling his or her financial support obligations. 

For instance, say one parent is ordered to pay child support for a 13-year-old child. The court determines that the annual child support is $10,000 a year for the child until the child turns 18 or graduates from high school, whichever occurs later. In this example, the total child support to be paid for the 13-year-old until the child turns 18 would be $50,000.  Life insurance can be used to secure that $50,000 so that if the parent paying child support were to die, those relying on the payments would not be left with nothing. Life insurance can be used in the same way to secure alimony payments, as well as other parental obligations as determined by the court, such as college and extracurricular expenses. 

When life insurance is used to secure obligations, the party responsible for making the payments will be ordered to maintain their policy in good standing, with funds matching the outstanding obligation designated to the appropriate beneficiary. It is important to note that alimony and child support orders can be modifiable as circumstances change over time, and the court may change the amount of life insurance that must be kept in place to match the obligation. If the obligation increases and the responsible party is not able to secure additional life insurance due to increased costs, the obligation can be secured from other assets, such as by designating the former spouse as a beneficiary for the appropriate portion of the responsible party’s retirement account.

How can I be sure the other party is keeping the life insurance policy in place to secure the obligation?

There are several ways that this information can be made available to you. The divorce agreement or judgment can require the other party to provide statements upon reasonable request or at a specified time, such as once or twice a year. Another option is for you, as the beneficiary, to receive permission to get updates from the life insurance company directly, which you could do through receiving an authorization from the policy owner.

If you discover that the appropriate policy is no longer in place to cover the court-ordered obligation, the Connecticut family court can order the other party to secure additional life insurance, or, if it has become prohibitively expensive for the individual to do so at that point, other assets can be designated to cover the obligation. 

The family law attorneys at Ruel Ruel Burns Feldman & Britt serve as trusted advisors and represent clients in divorce litigation and appeals in Connecticut. If you are considering a divorce or seeking a modification or appeal of your divorce orders, contact our family law attorneys at 860-206-9096 or online