How will my divorce affect my life insurance needs?

A few financial concerns might arise when getting a divorce. Mortgage payments, child support, paying for your children's college educations and alimony are the factors that must be finalized.

Marna Tucker, a senior partner with Feldesman Tucker Leifer Fidell LLP, family law specialists in Washington, D.C, says that as part of a divorce settlement, the spouse who is going to pay child support and alimony is obliged to purchase a life insurance policy.

Tucker claims, "Life insurance secures obligations that one party may have to another after death.'

An ex-spouse who receives alimony or child support should beware, warns Norse Blazzard, an insurance law attorney with Blazzard, Grodd & Hasenauer in Ft. Lauderdale, Florida.

The former spouse can always stop paying child support or change the beneficiary on the life insurance policy. If the former spouse does do so, fines and penalties in court are ahead of him.

Most experts suggest that you buy term life insurance instead of whole life insurance when you want to protect your alimony or child support obligations.

The premiums for term life insurance are also considered to be lower than those of whole life insurance.

People who pay child support opt for decreasing term insurance, a type of policy in which your death benefit gets smaller that the same time your children get older, Tucker claims.

Because most divorced couples have debts or financial concerns, term life insurance is probably the most cost-efficient choice to make.

Keep in mind that you can always call your insurance company to change your beneficiary, if your ex-spouse has remarried and has two household incomes, or makes enough money to support the children in a comfortable environment.

Insurers might let spouses who pay for child support to name children and ex-spouse as co-beneficiaries. 

If they are named under the age of 18, you must still designate a trustee for your children. Always remember that your ex-spouse might be under stringent rules by the court to manage the money in the children's best interest if you list your ex-spouse as trustee.