In many divorce agreements, one spouse is ordered to pay alimony to the other. When this is the case, the divorce agreement usually includes a provision that requires the spouse who is responsible for making the alimony payments to obtain and maintain a predetermined amount of life insurance that will protect the financial structure of their former spouse in the event of death. However, as is the case with so many portions of the divorce agreement, fulfillment of this provision extends far beyond the finalization of the Massachusetts divorce.

When the dust of the divorce settles, some individuals find that their former spouse is unable to obtain the required level of insurance. This can come about due to health issues, or if the former spouse allowed his or her policy to lapse and is now unable to renew as a result. In such cases, it becomes difficult or even impossible to resolve the issue, which could have a big financial impact of the spouse who is receiving alimony.

Financial advisors note that the time to address insurance issues is before the divorce is final, during the negotiation stage. The first step is determining the correct level of insurance needed, and then checking that your spouse’s current policy is sufficient to cover all of the obligations that would exist if he or she were to die before those obligations were satisfied. You can also ask the insurance provider to notify you if the premiums are not paid.

Perhaps the best insurance against the loss of insurance is simply to have the policy issued in your name, with your spouse named as the insured person and the one responsible for the premium. By owning the policy yourself, you will not only be aware if your ex stops making the premium payments, but you will also be protected against the insured party changing the beneficiary. As with so many aspects of divorce, an ounce of prevention is worth a pound of cure. Having your Massachusetts attorney address issues of insurance during the negotiation period that alimony is addressed could save you thousands of dollars down the road.

Source: The Huffington Post, “Gabrielle Clemens: Divorce and Term Life Insurance: Avoid These Three Common Mistakes!,” Gabrielle Clemens, July 16, 2012