No one wants to think of Divorce, but if you do have to go through this there are so many issues to work through that people often overlook what protection you might need. Arranging the right type of protection insurance can seem like a bit of a maze. If this is the first time you have considered it, you will hopefully find this a useful aid and point you in the right direction. Scroll down to read a real-life case study or to find out why Trusts are particularly important.*
Do you need to cover Maintenance Payments?
If one party pays regular maintenance payments to their ex-spouse, their payments will inevitably cease should they pass away. A life insurance policy can be set up on a ‘Life of Another’ basis. This means that the payee is insured but the policy is legally owned by the ex-spouse. If the payee passes away, the policy proceeds are paid to the ex-spouse, thus replacing the maintenance payments.
These policies are usually set up as Family Income Benefit which means that the claim payment is issued in regular monthly payments. The Family Income Benefit better reflects the lost maintenance payments and is usually much cheaper to purchase than level term cover. Either the payee or the ex-spouse can be responsible for covering the monthly premiums. A point to note is that you must have the ex-spouses permission to take out the cover on their life. They might also be called to carry out a medical depending on the amount to be insured.
Do you have a marital home?
If so there are several scenarios, depending on your financial status. Will you have to sell the home and divide the equity? Will one move out and purchase another home, or if unaffordable, possibly rent or live with family or friends? Will you both stay in the same home until you can split the property?
Whatever your solution it is important to consider what would happen if either of you passed away or became ill. Our team of expert advisers is here to provide you with impartial advice and ensure any recommendations match your specific requirements.