When you get married, one of the things you may not think about is life insurance. After all, your spouse is going to live forever, right? Wrong. In today’s economy, it’s becoming more and more important to have life insurance in place in order to protect your spouse and children should something happen to you.
But is a life insurance policy a marital asset? There are a few factors to consider when answering this question: the policy’s term, the premiums, whether or not you can name your spouse as an beneficiary, and more. So read on for all the information you need before making this important decision.
Is A Life Insurance Policy A Marital Asset?
If you are married, a life insurance policy may be considered a marital asset. This means that it may be subject to division in a divorce or legal separation. If the policy is transferred from one spouse to another as part of the marriage, the original owner may not be able to enforce the policy against the new owner. Additionally, if one spouse dies while the other is still living, the surviving spouse may have limited rights to receive benefits from the policy.
The Cost of a Life Insurance Policy
A life insurance policy can be a marital asset if it provides financial protection for the spouse and children in the event of the insured’s death. However, the value of a life insurance policy may be reduced if there is a pre-existing condition on the part of the insured. Additionally, any cash surrender value or annual increases that are earned on the policy may also be subject to federal estate tax rules.
Given these potential tax implications, it is important to consult with an experienced tax advisor before purchasing a life insurance policy. Additionally, always keep in mind that any proceeds from a life insurance policy will not be available until after the death of the insured. This means that any family member who wants to receive money from the policy must first file a claim with the insurer.
How to Get a Life Insurance Policy
Many people believe that life insurance is a marital asset, but this is not always the case. Unless your divorce agreement specifically states that the life insurance policy is a marital asset, it is not considered a marital asset. This means that you and your spouse can split the policy evenly if you choose to do so.
What to Do If You Lose Your Life Insurance Policy
If you have a life insurance policy, it can provide financial security in the event of your death. However, because life insurance is a marital asset, it may be subject to division during divorce proceedings.
Generally, life insurance policies are considered marital assets if they were obtained before your marriage or during the marriage but before the filing of a formal petition for divorce. If your life insurance policy was obtained after your marriage, it is generally considered a separate asset.
If you are considering whether to keep or divide your life insurance policy during divorce proceedings, it is important to consult with an attorney who is skilled in these matters. An attorney can help you understand the provisions of your policy and how they may affect your ability to receive financial support from your ex-spouse during the process.
Conclusion
When it comes to money, many couples view their life insurance policy as a marital asset. But is this really the case? In short, most states recognize that life insurance policies are an asset and can be divided in a divorce settlement. However, the value of the policy will be based on your individual market conditions at the time of your death and your spouse’s age, health condition and other assets.
Consequently, whether or not a life insurance policy is considered a marital asset will vary from case to case and state to state. If you’re interested in learning more about how your state regards life insurance policies as assets, speak with an experienced estate attorney or consult with a financial advisor.
