The top ten life, disability and long-term care insurance features and strategies during divorce that your attorney or financial advisor may not tell you about.
There are two kinds of life insurance generally: term insurance and permanent insurance. - Term insurance has no cash value, and after a certain period, say 10 years, it goes away. An employer often provides term insurance. If the employee leaves employment, the term insurance ends. However, independent term insurance continues as long as the premiums are paid.
- The Court of Jurisdiction may consider independent term insurance an asset. However, it is often over-looked by the Court.
- Permanent insurance is just that: unlike term insurance, it covers the insured person for life and may build cash value. As long as the premiums are paid and/or the cash value of the insurance is enough to keep the coverage in force it covers the assured for life.
- Since permanent insurance often has cash value, the Court may consider this cash value and/or permanency of coverage an asset. However, it is often over-looked by the Court.
- There are two types of permanent insurance, Universal Life (UL) and Variable Universal Life (VUL). The cash value of Universal Life grows at a fixed interest or dividend rate. The value of Variable Universal Life grows by investing in a set of sub accounts that resemble mutual and money market funds. As a rule, only salespersons who hold NASD brokerage and state life insurance licenses can offer VULs.
- Consider both term and permanent insurance to ensure alimony payments, property settlement notes, and child support, etc. The obligee should become the owner of the policy to ensure that the obligor makes payments or can take over the payments in case the obliged party stops making them. If the minor child is the beneficiary, make sure that the policy conforms with state and federal Uniform Gifts to Minors Act (UGMA) language.
- Private permanent disability insurance should be considered an asset. Consider private permanent disability insurance in order to ensure alimony payments, property settlement notes, and child support, etc. Make sure to observe the same ownership conditions as 7 above.
- Consider Long Term Care Insurance (LTC) as a supplement to support or instead of a property settlement. Make sure to observe the same ownership conditions as 7 above.
- Make a full and detailed inventory of all insurance assets before considering a financial settlement. Consider different types of insurance in order to ensure the financial settlement if the respondent loses their employment, dies, or becomes disabled. If it stipulated in the divorce decree as support, insurance payments maybe tax deductible to the obligee. Apply for or modify any insurance that is in effect while the parties are still alive and before the divorce decree becomes final.
This checklist was created by William Juch IV CDFA™
William is Managing Member of Coastal Wealth Advisors LLC, a New England based firm specializing in financial issues during pre-marriage, marriage, divorce, post divorce, and remarriage. William helps clients through these often-difficult periods by helping them concentrate on the business aspects of relationship change. William is certified as a CDFA™ in all 50 states. His practice is truly fee-only. Unlike other CDFA™'s who are also financial advisors and/or brokers, William sells no products and is not paid by “assets under management” schemes before or after the divorce. William regularly lectures nationally to attorneys and financial advisors on special financial topics concerning relationships. William also specializes in military divorce. He was formerly a top financial advisor at a major investment firm holding NASD and state insurance licenses in many states.
For more information, you can contact William through his homepage: www.divorcehelp.us.com or directly at: coastalwealth@myfairpoint.net.
| Advertisement: | ||
|---|---|---|
 |
 |
 |
 |
 |