Saturday, January 30, 2021
From The National Law Review:
When divorce cases do not settle, and a judge has to decide the issues of alimony and child support, the law governing support allows the judge to order life insurance to secure the obligation. Typically, life insurance is needed in order to make sure a parent has sufficient support for a child if child support is ended due to the other parent’s death.
Who gets the insurance? In the vast majority of cases, it is the surviving parent who is named as a trustee on behalf of the child or children. The amount of years the child will need support is also a factor. Another issue to consider is making sure the designation of a beneficiary on the life insurance forms is appropriate and makes sense. Alimony is most often secured by life insurance. Depending on how much and how long a payer is paying alimony, the life insurance amount will be calculated.
As the children grow older, the need for as much life insurance decreases. Many agreements have a provision that allows the insured to decrease the face amount of the policy as time goes on. Another issue that has to be considered is the age and health of the person paying support at the time the obligations are set.
Read more here.