How to Handle a Life Insurance Policy After a Divorce [2025]

The one thing that’s certain about life is it’s anything but certain. Not everything goes our way or as we expect it to. Sadly, that applies to marriage, too.

No one (at least no one whom I’ve ever known) gets married thinking that it won’t last “until death do we part.” But people grow apart. People take each other for granted. People decide they want out.

Nearly half of all marriages end in divorce according to statistics from the CDC/National Center for Health Statistics.

So what do you do if you get divorced and have a term life insurance policy with your ex-spouse as a beneficiary?

The answer: It depends.

Term Life Insurance During a Divorce

Your options for life insurance after a divorce will vary depending on the divorce settlement.

Quite commonly, divorce agreements state that one spouse, generally the parent paying child support or alimony, must maintain life insurance on themselves to provide some financial stability for their ex if they pass away before they’ve met their financial obligations. So if you have a term life policy, you may need to keep it. If you don’t have a life insurance policy, you may need to apply for one if there’s a court order requiring you to get one.

Depending on your situation, you might negotiate transferring ownership of your term life policy to your ex-spouse. In that scenario, your ex-spouse would remain as the beneficiary while assuming responsibility for paying the policy’s premiums. Can’t pay the premium? Learn more here: What Happens if You Can’t Pay Your Term Life Premium.

What if you don’t have children and you purchased your term life policy to help your spouse pay off your home mortgage or pay off other debt if you were to die? You may want to discuss terminating the policy since its original purpose may no longer be a priority for you.

If you have older children dependent on you financially, can you change your life insurance beneficiary? The option might be to remove your ex-spouse as a beneficiary and change your children’s designation to primary beneficiaries.

These are just a few directions things could go, particularly when it comes to decisions related to your divorce settlement and the associated court rulings, including considerations for life insurance for non-working spouses.

Educate Yourself About Your Options and Get Expert Guidance

Although term life isn’t considered an investment in marital property like whole life insurance with a cash value, it still requires attention when you’re going through a divorce.

Talk with your attorney and a financial planning professional about your options. There’s no one-size-fits-all solution, so it’s important to discuss your situation with trusted experts who can cover all the bases.

Although I’m not divorced, I have a fair share of family members and friends who have gone through it. Whether a divorce is amicable or not, it’s extremely stressful. Empowering yourself with knowledge and sound advice won’t eliminate the heartache, but it can minimize the headaches.

Haven’t looked into the affordability of term life yet? Get a free, no-obligation term life insurance quote now and connect with a knowledgeable insurance professional who can answer your questions.

Case Studies: Handling Life Insurance Policies After Divorce

Case Study 1: Transferring Ownership

Sarah and John recently divorced, and they had a term life insurance policy with Sarah as the insured and John as the beneficiary. As part of their divorce settlement, they agreed that John would assume ownership of the policy.

This arrangement ensures financial stability for Sarah and their children if anything were to happen to her. By transferring ownership, John becomes responsible for paying the policy premiums, and he remains the beneficiary.

Case Study 2: Terminating the Policy

Mark and Lisa decided to end their marriage amicably. They had purchased a term life insurance policy to cover their mortgage in case either of them passed away. However, after the divorce, paying off the mortgage is no longer a priority for either of them.

They discussed terminating the policy and decided it was the best course of action. They canceled the policy, as it no longer served its original purpose.

Case Study 3: Changing Beneficiaries

Amy and Michael divorced, and they had a term life insurance policy with Amy as the insured and Michael as the beneficiary. They have two children who are financially dependent on both parents.

As part of their divorce settlement, they agreed to remove Michael as the beneficiary and change the designation to their children as primary beneficiaries.This change ensures that their children will be financially protected in the event of Amy’s passing.