Recently divorced? Here's why you need to update your life insurance

Divorce is a major life event that brings about numerous emotional and financial changes. One crucial aspect that often gets overlooked amidst the upheaval is updating your life insurance. 

Here’s why it’s essential to review your life insurance policy after a divorce.

Change your beneficiaries 

One of the key reasons to update your life insurance after a divorce is to revise your beneficiaries. During your marriage, your spouse was likely the primary beneficiary of your policy. However, you may want to consider designating other beneficiaries, such as your children and family members, or even establishing a trust fund. 

By updating your life insurance beneficiaries, you ensure that the death benefit will be allocated to the right individuals, providing them with essential financial support in your absence.

Adjusting coverage to fit new financials 

Divorce frequently significantly alters one's financial landscape. One may acquire new obligations, such as alimony or child support. 

It is vital to reevaluate your life insurance coverage to ensure it aligns with your new circumstances. Depending on your current financial responsibilities, you may need to adjust your coverage amount, whether that means increasing or decreasing it.

Protecting your children's future

If you have children, securing their financial future is likely a top priority. It's essential to update your life insurance to include provisions for their care and well-being. This may involve establishing a trust or appointing a guardian to manage the funds until your children reach adulthood. By taking these steps, you can ensure that your children are financially supported, regardless of the dreams they pursue.

Complying with legal requirements 

In certain instances, divorce settlements may stipulate specific life insurance requirements. For example, you may be obligated to maintain a designated level of coverage to secure alimony or child support. It is essential to review your policy with your lawyer and make any necessary adjustments to ensure compliance with your divorce agreements.

Re-evaluate your insurance policy

Your current policy may no longer align with your needs, making it essential to explore the various types of life insurance and how they fit into your unique situation. 

Term life insurance provides coverage for a specific duration and usually features lower premiums. This option is ideal if you require protection for a defined timeframe, such as until your children reach adulthood or significant debts are settled. 

On the other hand, whole life insurance offers lifelong coverage and includes a cash value component, though it typically comes with higher premiums. This choice can be advantageous if you seek both financial security and the potential for investment growth.

What about your house? 

With CAA Better Mortgage Protection, you and your spouse are financially protected in the case of separation. 

Unlike other marital assets that are divided, Better Mortgage Protection ensures that both parties can change to individual policies and are entitled to 100 per cent of the insured sum. This means you can focus on moving forward without the added stress of mortgage complications. 

Get life insurance now

After a divorce, it's crucial to take proactive steps to secure your financial future and that of your loved ones. Reviewing and updating your life insurance policy is key to this process.

Book an appointment today to speak with a CAA Protect advisor or call 1-800-709-5809.

Questions about life insurance? To speak to a professional who can guide you to the right coverage from the right insurer at the right price call us at 1-800-709-5809 or email us at info@caaprotect.ca.