Divorce is right up there with bereavement when it comes to raising stress levels, and – as well as being one of life’s most unpleasant experiences, a break up also seriously impacts on your financial health. This is why it pays to plan ahead – and life insurance, as ever, should be an integral element of planning for life’s undesirable eventualities.
Unfortunately, however, married couples neglect to consider negative outcomes. As Carole Peck, president of Carole Peck Financial Center puts it “Couples often overlook the financial ramifications of their split, or assume lawyers will hammer things out to everyone’s satisfactions.”
Female Spouse often Loses out Financially in Divorce
Very often it is the female partner who gets to keep the family home in the event of a divorce, in order to carry on looking after the children in familiar surroundings.
In exchange the main wage earner, (usually, but not always), the male spouse, tends to keep control of IRAs and other long term financial assets; and while he continues to reap the rewards from their previously joint financial portfolios the family home may start to seem less of an asset and more of an intolerable financial burden.
Even with decent alimony and child support there may well not be sufficient funds to keep up with mortgage payments, property taxes and home repairs. And if payments cease due to the illness or bereavement of an ex-spouse the family face eviction.
Life Insurance can Provide Financial Stability in the Event of Divorce
Ellie DeLano writes a blog – the ‘Divorce Diaries’ about her personal journey through the divorce process and urges women to think about the importance of life insurance in the event of divorce . The spouse considered to be the most financially well-off (usually the male) should be encouraged to take out a life insurance policy which includes the children as beneficiaries, until they can be considered independent.
In her case she was lucky – a divorced friend had urged her many years previously to have it written into the parenting agreement that Peter, her husband, be “required to name me as beneficiary on his life insurance, until the children are no longer my dependents.” Now that the couple are divorcing Ellie is thankful for this timely advice.
As she says, “If I were to die unexpectedly, Peter would have more than enough money to buy and keep a roof over the kid’s heads, feed them and even probably send them to college. If the situation were reversed, I’d be in serious trouble. We’d lose the house without his support check, and life would certainly be much harder than I complain about now.”
Life Insurance could be a Lifeline – so it Pays to be Practical
In her ‘Divorce Diaries’ Ellie advises even the most happily married to plan for any contingency: “Don’t sell yourself short just to seem like the ‘nicer’ person.”
We all enter into our marriage contracts thinking it will last forever- but it is imperative to use your ‘practical head’ when planning the future. Setting up adequate life insurance has to be a priority when it comes to safeguarding a future for you and your children – something which you may be very thankful for one day.
Source: mainstreet.com posted 02 December 2010
Divorce Diaries, posted in WomansDay.com Editors on 29 December 2010
photo credit: epSos.de