Life Insurance: How Much Is Necessary For Support Obligations?

How much life insurance is necessary and whether the court will make you obtain coverage depends on many factors.

If either or both parents work and had life insurance prior to the divorce and still have children to support then it is highly likely that the parents need to continue life insurance coverage for their children. If the purpose is to replace child support which would be lost upon a parent's death, the amount of insurance will depend upon the age of the children, the amount of existing insurance and the amount of child support to be paid.

If a spouse is receiving maintenance (spousal support) the number of years and the amount of maintenance will be considered to determine the proper amount of life insurance.

Divorcing families that did not have life insurance during the marriage because they could not afford to purchase coverage or who could not obtain coverage due to medical history might not have to obtain or pay for any coverage due to these limitations.

The amount of coverage in a divorce settlement can be fixed throughout the period of child support/maintenance or can be in an amount that decreases at agreed upon times as the remaining support obligations are reduced. For example, upon divorce the policy might have been for $150,000 but if the child support/maintenance obligation that remains until termination is $75,000 perhaps only half of the policy should be mandated for the prerson receiving support.

It is also common to name the children as the beneficiaries of the coverage with the other parent as the custodian of the money so that a child does not waste the money. The selection of the custodian could for good reasons be someone other than the parent.

It is typical for the obligation to maintain life insurance to end when the support and maintenance obligation ends. However, this does not apply to situations where life insurance is being used to protect pension benefits. Of course a parent always has the option to continue the children as beneficiaries or to provide a larger amount of insurance if they so choose.

If this is an issue in your divorce, please call my office to arrange a personal consultation to discuss this as well as all other issues related to your divorce.