Life Insurance and Support

Life insurance can be a key term to negotiate in any divorce settlement involving child and/or spousal support.  If the case proceeds to trial, using its discretion, a San Diego Family Court may order a party paying support to obtain or maintain a life insurance policy or annuity as well.  Life insurance can provide security to the supported party in the event of the death of the supporting party.  Although support obligations do not survive the supporting party’s death, life insurance is a way to secure support anyway.

If the parties agree to include some sort of life insurance provision in their global settlement agreement, many elements of that provision may still be negotiated.  The parties must decide the following: the beneficiary/beneficiaries of the policy, whether the policy provides security for child and/or spousal support, the amount of coverage, term of the policy, amount of premiums, and which party is responsible for paying the premiums.  Many of these factors will be guided by the relative incomes of both parties, the paying party’s willingness to agree to such a provision, and the nature/extent/scope of the estate of both parties.

If the supporting party already has an existing life insurance policy in place either through his/her employment or otherwise, he or she may agree/be ordered to maintain that policy.  For example, a Marital Settlement Agreement (“MSA”) may contain a provision that the supporting party continue to make the premium payments on his/her current life insurance policy along with a prohibition against changing the beneficiary/beneficiaries or an order to make the spouse and/or children named beneficiaries.

The amount of the life insurance coverage may be determined by considering the monthly support and the foreseeable term for payment of that support.  For example, if the supporting party is ordered to pay $5,000.00 per month as and for child support and the child is 5 years old, an insurance policy insuring the life of the supporting party for $750,000.00 might not be unreasonable.  This is because the supporting party will likely have to maintain $60,000.00 per year of child support for another 13 years to 14 years.

When considering whether or not to agree to maintain or purchase a life insurance policy as security for child support, our firm urges parents to consider the potential benefits it can provide to their children. Raising children and effectively supporting them through adulthood is an expensive endeavor and vital responsibility.  It is important to consider the potential circumstances your children may face upon your death rather than “giving in” to your spouse’s demands when making this decision.

Please contact us if you are considering a divorce from your spouse. Nancy J. Bickford is the only attorney in San Diego County representing clients in divorces, who is a Certified Family Law Specialist (CFLS) and who is actively licensed as a Certified Public Accountant (CPA). She has a great deal of experience in analyzing issues regarding the relationship between spousal support and life insurance. Don't settle for less when determining your rights. Call 858-793-8884 for more information about the consultation process.