Insuring That Your Children Have the Support They Need — Part Two

{3:00 minutes to read} In the last post, I addressed the designation of beneficiaries of your life insurance in order to ensure the continuation of child or spousal support. While the continuation of support is important, there are some other issues about life insurance coverage that may need to be discussed in mediation.

Employer-Provided Life Insurance

Individual life insurance policies owned and paid for by the parties provide the most control and flexibility in terms of maintaining insurance coverage. However, sometimes you may not be able to afford premiums on an individual policy, or may not qualify for life insurance coverage other than through a group plan provided by an employer.

Some of the things to discuss in mediation:

• If the employer-provided policy amount offered without charge is insufficient to provide the support necessary, can you purchase additional coverage?
• What will happen to your insurance coverage if you lose your job?
• Can you consider a combination of a term policy you own plus employer-provided insurance coverage?

What if the person paying support is unable to qualify or afford life insurance?

You may have a situation where a person’s health can make life insurance difficult to obtain or unaffordable, and there is no or insufficient employer life insurance coverage available.

If this is the case, you can consider leaving assets, either by will or beneficiary designations, to ensure that there are funds available to the surviving parent for the support of the children (or to the spouse if it’s spousal support that is being paid). The same considerations on naming the beneficiary as discussed in Part I will need to be considered in this case as well.

This may not be optimal since assets may decrease over time, but if you have explored all options and there is no opportunity to obtain sufficient life insurance coverage, it is something to consider.

Both Parties Need Life Insurance Coverage

You might think that life insurance is only needed for the person who is paying child support. However, there are countless contributions the person receiving support provides and many things he or she pays on behalf of the children. The surviving parent will need a policy of their own to cover incurring additional costs for the monetary and non-monetary contributions that the deceased parent was making on behalf of the children.

Request for Proof

Whether you are providing for life insurance or making beneficiary designations, it is customary for a separation agreement to outline a procedure whereby each party may request proof that the proper designations are made and premiums are paid.

Life Insurance — a seemingly mundane and boring topic, but one of great importance to protect child/spousal support.