Clients are often surprised to learn that life insurance is often addressed during a family law case. The issue of life insurance generally arises in a family law matter in one of three ways:
- Within an Asset Division: Certain types of life insurance policies have cash surrender values. The owner of the policy may be able to cash in the policy, or borrow against it. These types of policies are usually referred to as “whole life” or “universal life” policies. In such cases, the life insurance policy itself (as compared to the death benefit) is listed as an asset to be divided by the courts.
- To Secure Support: In cases where a party is obligated to pay child support or spousal support, the court generally orders the obligated party to carry life insurance in an amount sufficient to secure that support obligation. This protects the dependent party in the event the support is not fully paid at the time of the obligated party’s death. The obligated party may not change the beneficiary or amount of coverage without court permission. In fact, the life insurance company may be required to provide notice to the dependent party of any changes made by the obligated party. ORS 107.820.
- To Secure Retirement or Pension Assets: Similarly, when a dependent spouse has been awarded a share of a pension or retirement plan, the court may order the obligated party to maintain any existing insurance policies on his/her life, naming the dependent spouse as the beneficiary of the policy.
Our experienced divorce attorneys can help you determine the correct amount of life insurance to be ordered in your case. Contact one of our experienced family law lawyers for an appointment today.
by Jill Brittle