Divorce is never easy. Of course, if you’re visiting this site, you probably already know that. But what can make a divorce even more stressful is worrying about the impact your divorce might have on your kids.
Children of divorced or single parents are at particular risk of financial instability. That means whether you’re raising a child alone or have shared custody, you need to take special steps to protect them.
At SBLI we’re committed to helping provide single and divorced parents with the support and confidence they need to build a more secure financial life — for themselves and their children.
Life insurance and divorce: 6 pitfalls to avoid.
Whether you simply want to protect your loved ones or need life insurance according to the terms of your divorce, there are six pitfalls you should be aware of and that you should discuss with your attorney before you get a policy.
1) Relying on a workplace insurance policy. It may be a nice perk from your ex-spouse’s employer, but relying on workplace insurance to satisfy the requirements of a divorce agreement can be risky. That’s because leaving an employer may cause the policy to lapse, potentially putting you and your ex-spouse in breach of the terms of your divorce and, worse still, leaving your children without coverage.
2) Going to extremes. Choosing the biggest company or the cheapest rates may come with a hidden price. Large providers may have longer underwriting times, which can be a problem when you’re facing a deadline for coverage. Before selecting any insurance provider, you’ll want to consider the company’s longevity, reputation, and financial strength ratings to ensure their promise to pay is backed up by a track record of paying claims quickly and efficiently.
3) Using a monolithic approach. Often, coverage requirements decline as dependent children get older. A “laddering” strategy, which uses a series of smaller, overlapping term policies, may help save you a substantial amount of money. Sometimes you can get term policies that have features built in that reduce the coverage amount over time.
4) Choosing the wrong product. In some situations, such as lifelong alimony, whole life insurance may be the right product to choose. But in many cases, term life or a blend of term and whole life policies is a more cost-effective way to go. One important consideration when picking the right product is whether you want to keep your coverage in place beyond the terms of your divorce to protect a new spouse, adult children, or grandchildren.
5) Focusing only on income. Replacing earned income represents a good baseline for insurance coverage. But you should also consider future financial obligations that your children may face when considering how much insurance you or your ex-spouse should get. These may include college expenses and uninsured healthcare costs such as orthodontia.
6) Going it alone. Going through a divorce is tough enough. So when thinking about the complexities of life insurance for this new stage in your life, don’t hesitate to reach out to financial professionals who have specific experience with divorce cases. It can make the process far easier, quicker, and more affordable for you.
Why choose SBLI for your life insurance?
- Our Life Insurance Professionals are experienced in helping divorced parents find the right life insurance protection at an affordable cost.
- We make the process easy by leading you through the steps you need to take.
- You’ll get your policy fast, especially term life policies of $500,000 or less. Those policies are often issued in about two weeks. (That’s significantly faster than other life insurance providers!)
- Our term life policies above $500,000 feature some of the lowest rates in the country.
- SBLI has been around since 1907, when we were founded by Supreme Court Justice Louis Brandeis. Since then, over a million families have trusted us to give them affordable, dependable insurance.
Ready for a quick, easy, affordable way to help protect your children? Talk to an SBLI Life Insurance Professional today.They’ve helped many people going through divorce get the right life insurance at the right price.
Policy form #B-56 series. The Savings Bank Life Insurance Company of Massachusetts, Woburn, MA. Products and features may not be available in all states. © 2017 All rights reserved. NAIC #70435.