What happens to your life insurance during a divorce?
Going through a divorce and having to move on can be a challenging thing to do. You will have to go through a range of policies such as your life insurance policy to see if you still want to keep your partner listed as a beneficiary or remove your partner. Whichever option you choose, there are a few things to consider.
What happens if you have taken out a joint policy?
Joint policies do exist in South Africa and it could be a viable option for couples to choose. However, these are not widely available, which is why many couples will choose to have separate life covers to cover each other. But what happens when you get divorced?
You will have to consider who will continue to pay the premium and who will be removed from the cover from a joint policy, which can give the disadvantage of the removed partner having to restart a new policy that could have a higher premium.
Updating your beneficiary list
Keeping your life cover up to date ensures your beneficiaries are protected financially. A divorce means you will have to consider updating your life cover by removing your spouse.
Removing your spouse from your will does not necessarily mean they will be removed from your life cover. However, it is equally important to ensure that you keep your will updated too.
Remember to call your insurer to make the changes to your life cover to get everything on the right track. There is no limitation to when you can update your policy, but it's advisable to do this as soon as possible.
Handling the financial impact
Not only is a divorce emotionally taxing on everyone involved, but it also means you will have to adapt your finances to the new situation. The same goes for your life insurance policy. People who are coming from a two-income household will have to consider how to adapt to a single income household.
Check your life cover to see if your cover is adequate to cover your financial needs. One phone call to your insurer will help you increase the cover amount should you feel it is not adequate.
What if you do not have life cover?
Divorce changes a lot of things financially. Changes such as moving from a two-income household or being supported by your spouse to having to juggle the financial aspects alone can be challenging and need to be prepared for.
Having life cover is crucial as it can help protect you and your children, parents or beneficiaries when you are faced with a terminal illness or when you die. It's a safety net that we all need. If you are not sure how much life cover will be enough to cover you and your loved ones, you can use our life insurance calculator.